Wills Flashcards
(296 cards)
1
Q
What does ‘testate’ mean? + what happens
A
When deceased’s will covers their entire succession estate. Only the will is relevant when determining how to distribute their estate.
2
Q
What does ‘partially intestate’ mean? + what happens
A
When the deceased’s will does not cover their entire estate. The will is followed but intestacy rules apply to remaining property.
3
Q
Main types of property which will not pass to the succession estate
A
Donationes mortis causa, discretionary pension scheme benefits, insurance policies written in trust, statutory nominations, property held as beneficial joint tenants, some other beneficial interests under trusts
4
Q
3 requirements for valid DMC
A
The gift is made because the donor believes they may die imminently of a particular cause.
The donor makes it clear that the gift is conditional upon them dying, and that the property reverts to them if they survive.
The donor either parts with the property or something representing ownership of it.
5
Q
When does an insurance policy form part of the succession estate?
A
If deceased had a simple life insurance policy = part of succession estate.
6
Q
If intestate leaves spouse but no issue?
A
Spouse inherits entire succession estate absolutely
7
Q
If intestate leaves issue but no spouse?
A
Issue inherits entire succession estate on the statutory trusts
8
Q
How long must spouse survive deceased in order to be entitled to succession estate?
A
28 days
9
Q
Entitlements for spouse if intestate leaves issue & spouse?
A
Personal chattels absolutely, statutory legacy of £322k free of tax and costs plus interest from date of death to date on which payment is made, one half of the residue (if any) absolutely
10
Q
Entitlement for issue if intestate leaves issue & spouse?
A
Other half of the residue (if any) on the statutory trusts
11
Q
If issue do not survive the deceased?
A
Their own issue may still inherit their entitlement under the ‘substitution limb’ of the statutory trusts
12
Q
What is contingency limb of statutory trusts?
A
Each entitled beneficiary must survive intestate and reach age of 18 or marry earlier in order to inherit. If not satisfied: beneficiary has contingent interest.
13
Q
What is substitution limb of statutory trusts?
A
If entitled beneficiary dies before intestate, beneficiary’s own issue can inherit in their place, provided they satisfy contingency limb.
14
Q
s46 AEA order of entitlement to succession estate - if intestate not survived by a spouse or issue?
A
- parents 2. siblings of whole blood (share both parents) on statutory trusts 3. siblings of half blood on statutory trusts 4. grandparents 5. uncles and aunts of whole blood 6. uncles and aunts of half blood 7. the crown as bona vacantia
15
Q
What is excluded from personal chattels?
A
Money or securities for money, property used by the intestate at their death solely or mainly for business purposes, property held at the death of the intestate solely as an investment
16
Q
Spouses option to appropriate marital home if held as TIC?
A
Can appropriate home in full or partial satisfaction of statutory entitlements, i.e. ‘buy’ deceased’s share of the property from personal representatives using money would have received from the estate
17
Q
When & how must surviving spouse make election to appropriate marital home?
A
Make election in writing to personal representatives within 12 months of the date of the grant.
18
Q
What date is used for valuation of marital home re spouse appropriating?
A
Home is valued as date of appropriation not date of death
19
Q
What are restrictions on right to appropriate marital home?
A
Consent of court required where home is only part of a building owned by the deceased or where home is part of farm or other business premises
20
Q
True or false: If a person dies after expressing an intention to make a gift but before delivering the asset to the donee, equity will perfect the imperfect gift as long as the donor did not change their mind before they died.
A
False: It is not sufficient that the donor’s intention remained unchanged before their death. The gift must either be conditional upon death and satisfy the requirements of a donatio mortis causa, or it must be intended to be immediate and satisfy the requirements of Strong v Bird.
21
Q
4 legal requirements for a valid will?
A
- Testator is over 18, 2. Has testamentary capacity, 3. Has knowledge & approval, 4. Has satisfied formal requirements under Wills Act
22
Q
Banks v Goodfellow test for testamentary capacity
A
Testator must understand the nature of the act and its effects, appreciate the extent of the property which they are disposing, understand & appreciate the moral claims to which they ought to give effect & have no disorder of the mind that perverts their sense of right
23
Q
Timing requirements for testamentary capacity?
A
Testator must have testamentary capacity at the time the will is executed or at the time they gave instructions for the preparation of the will (if it was prepared in accordance with those instructions)
24
Q
Kenward v Adams ‘Golden rule’
A
When taking instructions for a will from a client who is elderly or seriously ill, a medical practitioner should be instructed to make an assessment of testator’s capacity
25
Who holds burden of proof of capacity?
Person seeking to admit the will to probate (usually executor) but capacity is presumed if will on the fact of it appear rational & has been duly executed
26
Can a will be made for someone who lacks capacity?
Under statute a court can authorise the execution of a will on behalf of an adult who lacks capacity to make one for themselves, but court must be satisfied there are grounds to diverge from existing testamentary position and it is in persons' best interests
27
Does a discretionary trust not yet exercised go towards succession estate in intestacy?
No as no absolute right to benefit
28
How to get Land Registry Official Copies to be in sole name after joint tenant dies?
Death certificate to Land Registry and forms
29
How to get joint bank account to be in sole name after other party dies?
Death certificate to the bank
30
What is excluded from definition of personal chattels for the distribution under intestacy rules?
Business assets, investments & cash
31
What is statutory order of entitlement?
Parents, siblings, half-siblings, grandparents, uncles & aunts, half-uncles & aunts, the Crown
32
What general intention must a testator have to make a valid will?
A general intention to make a testamentary document which disposes of their property and should take effect following their death
33
What specific intention must a testator have to make a valid will?
A specific intention to make the particular will they sign i.e. they know & approve of its contents & understand choices they have made
34
Is knowledge & approval presumed?
Generally knowledge & approval is presumed if the testator had testamentary capacity and the will was executed with the requirements of the wills act
35
When is knowledge & approval not presumed?
If testator is blind or illiterate, if will was signed by someone on behalf of testator, there are suspicious circumstances
36
Effect if will is made with undue influence?
If whole will made under undue influence then whole will is invalid, if only part of will is made under undue influence then remainder may be given effect to
37
Where does burden of proof for proving undue influence lie?
WIth the person making the allegation & the court requires evidence
38
What is question when assessing whether a will has been made under undue influence?
Whether the testator acted as a free agent
39
Formal requirements for validity of a will?
In writing, signed by the testator or by some other person in his presence and by his direction, it appears that testator intended by his signature to give effect to the will, presence of 2 or more witnesses who sign in front of the testator
40
When should attestation clause be amended?
If the will is executed in special circumstances e.g. testator is blind or illiterate
41
Can gifts be made to attestating witnesses?
No - any such gifts are void but remainder of will is valid
42
What is the purpose of the commencement clause?
Identify the testator, state full name & address (sometimes occupation), and reference to any other names they are known by
43
What is the purpose of a revocation clause?
To revoke all former wills & codicils so only one valid will exists at a time
44
What is an executor?
A personal representative appointed by will
45
How many executors should be appointed?
Minimum 1 (Best to have more), maximum of 4 can apply for grant of representation
46
Ways in which an executor's role may be qualified?
By time, location of the assets or type of the assets
47
Can a partnership be appointed executor?
No but you can appoint all of the partners of the firm and specify one/two should act
48
Can you charge for your time as an executor?
Only professional executors can charge. Entitled to be paid a reasonable remuneration for the services they provide
49
What does executor do?
Administer the estate
50
What does a trustee do?
Responsible for management of any trusts that continue following the estate administration for as long as the trust is in existence
51
What is an attestation clause?
Describes circumstances in which the will was signed
52
Who may act as executor?
Any adult with mental capacity
53
What happens if a clause is uncertain?
It is void
54
What happens to specific gift if testator does not own it at death?
Gift adeems = fails to take effect
55
How to overcome conflict between specific gifts and gift of all chattels?
Amend gift of all chattels to only include ones not specifically gifted elsewhere
56
What is a general legacy?
A gift of property which is not distinguished from property of a similar type "a" not "my"
57
What is a residuary gift?
A gift of all the testator's property (succession estate) which has not already been disposed of under the will or later codicil
58
What is the general rule for determining date from which will speaks with regard to gift ?
Unless contrary intention is shown, the will speaks from the date of the testator's death
59
What is the general rule for determining date from which will speaks with regard to gifts of collections?
Construed to mean items included in the collection at the date of death
60
Rule for determining date from which will speaks when identifying persons who should inherit?
Will is deemed to speak from the date of execution
61
What is rule for payment of inheritance tax if there are no express provisions?
An individual gift is made free of IHT and IHT would be payable out of the residue as a general testamentary expense
62
What is rule for payment of expenses/cost of transfer of item if there are no express provisions?
The specific beneficiary bears the burden of costs of delivery of item & any expenses incurred after death in preserving the item
63
What is the general rule for payment of charges/debts of property if there are no express provisions?
Unless contrary intention is shown, the asset charged bears liability for payment
64
What happens if meaning of a will or clause is unclear?
The courts can rule on how it should be constructed, based on what testator intended by the words within the will
65
Circumstances in which extrinsic evidence can be submitted for determining meaning of will?
If the will or any part of it is meaningless; if the language used in any part of it is ambiguous on the face of it; if the will is ambiguous in light of the surrounding circumstances
66
What is commorientes rule?
If it is unclear who died first (if testator & beneficiary both die), then it is presumed that the eldest died first
67
What happens to IHT if order of death is unknown?
Deaths treated as simultaneous, for IHT purposes neither inherits from the other & estates are taxed separately
68
What is 'class closing' rule?
A class closes when any one member of the class first becomes entitled to possession i.e. 'grandchildren who reach age of 21' = after first grandchild reaches 21 no children born afterwards are included in the class
69
What happens if residue clause lapses?
Intestacy rules apply
70
What happens will contains gift to testator's issue but the intended beneficiary dies before the testator but has descendants of their own?
s33 Wills Act enables gift to be shared equally between the issue of the deceased beneficiary
71
Can s33 be excluded?
Yes but should be done with express wording
72
Eligibility to make an IPDFA claim?
Must be within jurisdiction of IPFDA; must demonstrate they fall within a recognised category of eligible applicants; must make claim within prescribed time limit
73
Jurisdiction of IPFDA?
Only applies where deceased died domiciled in England and Wales
74
Categories of eligible applicants under IPFDA?
spouse/civil partner; former spouse/civil partner who has not remarried; cohabitant of deceased for 2 years prior to death; child of deceased; any person who was treated by deceased as a child of their family; any person who was maintained by the deceased
75
Time limits under IPFDA?
Application cannot be made more than 6 months after date of grant of representation was made
76
Can time limit for claim under IPFDA be extended?
Court has discretion to extend the time limit for making a claim; taking into account: circumstances, whether negotiations were commenced before, if estate had already been distributed before notification of the claim, whether refusing applicant to bring proceedings would leave them without recourse against anyone else
77
Which property does IPFDA apply to?
Orders under IPFDA are made out of the 'net estate' of deceased
78
Grounds for making IPFDA claim?
Deceased's will did not make reasonable financial provision for the applicant; the distribution of the deceased's estate under intestacy rules fails to make reasonable financial provision for the applicant
79
Orders that court can make under IPFDA?
Periodical payments, lump sum, transfer of property, settlement of property, acquisition of property for transfer, variation of marriage settlements, variation of civil partnership settlements, variation of trusts on which estate is held
80
2 stage test for IPFDA claim?
1. Did the deceased fail to make reasonable financial provision for the applicant?, 2. If so, what award should the court make?
81
Surviving spouse standard of financial provision?
Such financial provision as would be reasonable in all circumstances for a husband or wife or civil partner to receive whether or not provision is required for his or her maintenance
82
Maintenance standard of financial provision?
Such financial provision as would be reasonable in all the circumstances of the case for the applicant to receive for his/her maintenance
83
When can court extend surviving spouse standard?
1. Applicant is former spouse or civil partner of deceased who has not remarried, or is judicially separated, 2. divorce, dissolution, nullity or judicial separation occurred within 12 months of death, 3. no order for financial provision has been made or refused in ancillary proceedings
84
What court must have regard to when considering person's financial needs for IPFDA claim?
Financial resources & financial needs, resources & needs of any other applicants, resources & needs of any beneficiary of the estate, obligations & responsibility which deceased had towards applicants or beneficiaries, size & nature of net estate, physical or mental disability of applicant or beneficiary, any other matter or conduct relevant in circumstances
85
Specific guidelines for court for IPFDA claims for spouse/civil partner?
Applicant's age & duration of marriage, contribution made by applicant to welfare of family of deceased (inc looking after home), provision which applicant might reasonably have expected to receive in divorce proceedings if couple had ended relationship at date of death
86
Specific guidelines for court for IPFDA claims for cohabitees?
Age of applicant & length of period of cohabitation, contribution made by applicant to welfare of family of the deceased
87
Specific guidelines for court for IPFDA claims for child of deceased?
Consider manner in which applicant was or might expect to be educated, also applies where applicant is not child but was treated as such
88
What is a variation in a will?
A direction from an original beneficiary to the deceased's PRs to transfer property that the beneficiary is entitled to to another person instead
89
IHT Consequences of variation?
Gift is read-back to date of death & treated as having been made by deceased to new beneficiary
90
Conditions for a variation to be effective at writing back IHT?
Variation made by original beneficiary in writing, within 2 years of death, contains express statement confirming s142 should apply, not made for consideration in money or money's worth
91
When does original beneficiary need consent of court to make a variation?
If they are a minor or lack mental capacity
92
Number of variations possible?
Each asset can only be varied once
93
Limitations to disclaimers?
Beneficiary can only disclaim before acceptance, can only disclaim whole gift, does not disclaim their rights under intestacy that arises as a result of disclaiming, original beneficiary cannot control who receives assets they disclaim
94
What is a precatory trust?
Arises where gift is made to beneficiary by will with a wish expressed as to how beneficiary should pass on assets to other
95
IHT consequences of precatory trust?
If beneficiary makes distributions intended within 2 years of testator's death then for IHT purposes treated as gifts made by testator's will
96
CGT consequences of precatory trust?
Re-distribution in accordance with testator's wishes would eb treated as disposal by original beneficiary
97
Can executors charge for their time?
Lay executors cannot, professional executors can. But provisions of a will can override the statute.
98
What are 3 kinds of IHT trigger events?
Potentially exempt transfers (that fail); Lifetime Chargeable Transfers; Death
99
What is the basic nil rate band?
325k
100
How much is residence nil rate band?
Extra 175k
101
When does PET become chargeable alongside death estate?
If individual does not survive 7 years after
102
What is a lifetime chargeable transfer?
A lifetime transfer of value made by a person into a trust on or after 22 March 2006
103
What is LCT tax treatment?
IHT payable on chargeable value of LCT at lifetime rate of 20%. If transferor survives 7 years then no further charge; if transferor dies within 7 years then LCT reassessed to tax at death rate of 40%
104
What is the cumulative total for IHT?
Total chargeable value of all chargeable transfers made in previous 7 years
105
When does residence nil rate band apply?
To individuals who leave their family home to direct descendants
106
What is transfer of basic nil rate band?
Allows surviving spouse to take advantage of unused potion of deceased's basic NRB (calculated as a percentage)
107
Can you claim TNRB from multiple marriages?
Yes but amount is capped at 100%
108
Can you pass TNRB to a new spouse?
Yes but capped at one full NRB
109
When must TNRB claim be made & by who?
PRs of surviving spouse must make a claim for the TNRB in the IHT return within 2 years of the end of the month of death - no need to make claim when first spouse dies. If fail to make claim, anyone liable to pay IHT can make claim after the deadline & HMRC has discretion to extend the deadline.
110
What are 3 conditions for RNRB to apply?
Deceased died on or after 6 April 2017; their death estate included a qualifying residential interest; the QRI was closely inherited by a direct descendant
111
When is RNRB capped?
If deceased's share or interest in property is worth less than 175k then it is capped at the value of the property
112
When does RNRB get reduced?
If estate net value is more than £2 million then RNRB is reduced £1 for every £2 above 2 mil threshold
113
What does 'closely inherited' mean?
If receive QRI by: gift under a will; operation of intestacy rules; operation of the rules of survivorship
114
Does a beneficiary with a contingent interest closely inherit for RNRB purposes?
No (unless specific exception applies)
115
Who is not 'direct descendants' for RNRB?
Siblings, parents, nieces & nephews
116
How to qualify for 'downsizing' rules?
Deceased must have given away or downsized QRI on or after Jul 2015; former home would have been QRI if retained; direct descendant inherits replacement QRI and/or other assets
117
What happens to deceased's share of property held as joint tenant for IHT purposes?
Deemed severance of JT immediately before death, so deceased's share of property is included in their taxable estate
118
How to avoid GROB rules?
Either do not derive any benefit from asset given away, or pay a market rent for the time they do derive benefit
119
Are DMCs included in IHT taxable estate?
Yes
120
When are life tenant's trust funds included in their IHT taxable estate?
If the trust was created before 22 March 2006; or if life interest trust creating 'immediate post death interest' created after 22 March 2006
121
Which assets are specifically excluded from the taxable estate?
Excluded property'; insurance policies written in trust for a third party; discretionary pension scheme payments
122
General rule for how to value IHT estate?
Assets valued at market value at date of death (but some special circumstances)
123
How is related property valued for IHT estate?
If assets owned by spouses worth more when valued together, each party's share is valued at their proportionate share of the combined total
124
How is joint property valued for IHT estate?
Where land is co-owned (with someone who isn't spouse), the value of the deceased's share is reduced 10-15% to reflect difficulty of selling a share of property. But deduction not applied where co-owners are married.
125
Which post-death expenses can be deducted for IHT purposes?
Reasonable funeral expenses & cost of a tomb stone
126
Which exemptions can you deduct from IHT estate value?
Spouse exemption, charity exemption, business property relief, agricultural property relief
127
What is spouse IHT exemption?
Gifts between spouses during life and following death are completely exempt. No upper limit to value of exemption if both parties domiciled in UK.
128
When does spouse exemption apply & not apply to life interest trusts?
Spouse exemption applies if spouse is life tenant but does not apply if spouse is only remainder interest.
129
What is charity IHT exemption?
All transfers to charities during life & after death are exempt from IHT regardless of amount given, provided gift is exclusively for purposes of the charity
130
Can charity gifts be conditional?
Yes provided the condition is satisfied within 12 months
131
How does leaving gifts to charity affect rate of IHT?
If person leaves 10% or more of estate to charity, reduced IHT rate of 36% applies in respect of chargeable assets in the estate
132
What is gift to political parties IHT exemption?
Gifts to established political parties are exempt from IHT, provided party had at least 2 MPs elected, or at least 1 MP elected and 150k votes
133
What is gift of land to housing association IHT exemption?
Gift of land is exempt from IHT if it is made to a housing association or to a registered social landlord
134
What is gifts for national purposes IHT exemption?
Gifts are exempt from IHT where made for designated national purposes - list of bodies institutions which are covered, e.g. museums & galleries
135
What is gifts to heritage maintenance funds IHT exemption?
Gifts to funds which are designated as 'heritage maintenance funds' are exempt from IHT. These are trusts which maintain historic buildings or land of scenic, scientific & historic interest
136
What is BPR?
Business property relief reduces IHT payable on qualifying business property.
137
When do unquoted shares qualify for BPR and at what rate?
All private company shares irrespective of size/value of shareholding. 100% rate of relief
138
When do quoted shares qualify for BPR and at what rate?
Shares listed on recognised stock exchange but only business assets if the taxpayer controls the company. 50% rate of relief.
139
When does business or interest in a business qualify for BPR and at what rate?
If the taxpayer is a sole trader or has a partnership interest. 100% rate of relief.
140
When do assets owned by taxpayer but used for business qualify for BPR and at what rate?
Land/buildings/machinery owned by a taxpayer but used for business purposes by a company the taxpayer controlled or a partnership in which they were partner. 50% rate of relief.
141
When is a business (or interest in a business) or shares in a company not business property?
If the business concerned consists wholly or mainly of dealing in securities, stocks or shares, land or buildings or making or holding investment
142
What is qualifying period of ownership for BPR?
Transferor must have owned the business assets continuously for 2 years immediately prior to relevant transfer
143
If person inherits business assets following someone's death, when are they deemed to acquire them?
On date of death
144
If spouse inherits business assets following spouse's death, when are they deemed to acquire them?
Deemed to have owned property from time it was originally acquired, irrespective of length of marriage
145
What is qualifying agricultural property?
Agricultural land and buildings, and farmhouses & cottages if 'character appropriate' to agricultural land & occupied for purposes of agriculture
146
What is qualifying period of ownership for agricultural property?
Must have been occupied for agricultural purposes throughout 2 years immediately prior to transfer, or owned by transferor & occupied by them or another for agricultural purposes throughout 7 years prior to transfer
147
What are rates of relief for agricultural property?
100% relief if transferor was owner occupier or property was let on tenancy beginning on or after 1st Sept 1995
148
What happens if APR and BPR both apply?
APR is given in priority to BPR. Not possible to claim BPR on an asset if asset also qualifies for APR.
149
What is woodlands relief?
Gifts of woodland following death may qualify for woodlands relief. Must have been owned for at least 5 years before death. Is a deferral which only applies to the value of the timber not the land.
150
What is quick succession relief?
Applies where person dies and death estate includes assets received by way of gift or inheritance; in 5 years before their death; and those assets were subject to IHT charge when transferred to the deceased. Tax paid previously is credited against later IHT charge.
151
What should be included in IHT account delivered to HMRC?
PRs should deliver account specifying all of property comprising deceased's taxable estate immediately before death & value of each item at date of death; and the exemptions and reliefs that apply
152
What is deadline for submitting IHT account to HMRC?
12 months from the end of the month in which death occurred
153
What is deadline for paying IHT?
6 months from the end of the month in which death occurred, after which interest becomes payable on unpaid tax
154
Can IHT be paid in instalments? If so, how many?
10 equal annual instalments. First instalment due by usual deadline, then each subsequent anniversary date.
155
What form must PRs complete about estate & give to HMRC?
IHT 400 (the IHT account)
156
What are categories of excepted estate for IHT 400?
Low value excepted estate; exempt excepted estate
157
What is exempt excepted estate?
Gross value is no more than 3 mil but no IHT is payable because after debts deducted & spouse/charity exemptions applied the net value is below the NRB
158
What are additional factors which prevent estate from being an excepted estate for IHT?
Made a GROB that subsists at death; estate includes more than one trust interest or single trust interest worth more than 250k; foreign assets are worth more than 100k; value of specified transfers exceed 250k; valim for residence NRB is being made
159
What is corrective account form?
Form C4 - used to correct information provided in IHT 400
160
When may administrator start to act?
Once the grant is issued
161
When may executor start to act?
From date of death
162
How is PR liable for loss caused by breach of duty?
PR is personally liable for loss caused by breach of duty
163
What are the duties of a PR before the issue of a grant?
Common law duty to dispose of deceased's body; statutory duty to provide info about estate to HMRC and pay IHT due
164
What are the duties of a PR under the grant of represenation?
Collect & get in real and personal estate of deceased and administer it according to law; provide inventory and account of estate assets
165
Who does PR owe duties to?
Estate beneficiaries & creditors
166
What must PR's do to comply with duty to collect in deceased's real & personal estate?
Identify & locate deceased's assets; identify deceased's liabilities and creditors; Obtain control, possession or legal ownership of the assets
167
What must PRs do to administer the estate?
Keep assets secure; pay deceased's debts & liabilities; meet administration expenses; pay legacies; distribute residue to those legally entitled
168
What is the reasonable time for PRs to carry out administration of the estate?
Within 12 months of the date of death, afterwards are required to justify a delay
169
What are fiduciary duties of PRs?
Must not put themselves in position of conflict or profit from their position, unless authorised by the court or fully informed beneficiaries
170
Do express provisions in a will or statutory powers take priority?
Express provisions in a will take priority
171
What statutory powers do PRs have?
Power to sell, charge or lease; power to appropriate; power to insure; power to invest; power to charge for PR services; power to delegate powers; power to appoint trustees
172
What are rules on power to appropriate?
Specific beneficiary must not be prejudiced; consent of recipient beneficiary is required; value of asset must be considered at the date of transfer/appropriation; cannot appropriate if value of asset exceeds beneficiary's entitlement
173
When must PRs carry out reviews of investments?
Regularly
174
What duties apply to the PR power of investment?
Duty to have regard to the standard investment criteria; duty to obtain advice
175
When can professional PRs charge for their services?
When they are not acting alone; and their co-PRs give written consent
176
When may PRs not delegate their powers?
How & whether assets should be distributed; whether fees or costs are payable rom income or capital; the appointment of trustees/nominees/custodians
177
What must PRs do if delegation is required?
Delegate in writing to the agent; provide them with a written policy statement which agent must agree to comply with
178
What can PRs do if testator ran a business as a sole trader?
Common law power to sell the business as a going concern within a year of death
179
Can a joint PR act alone?
If more than one PR is appointed then they must make decisions together & exercise discretionary powers unanimously. But when exercising power to sell or transfer estate asset they usually have authority to act alone.
180
What is a devastavit?
A claim of action against a PR for breach of their PR duties
181
When can devastavit claim be brought?
Where there is loss to the estate as a result of PR wrongdoing. Claimant seeks court order that PR makes good the loss using their personal assets, and even if no loss C can seek account of unauthorised profit/transaction to be set aside
182
Basis of devastatit claims?
Maladministration, Misuse of assets, Negligence, Breach of fiduciary duty
183
How can a PR who fails to carry out duties properly be removed from the role?
A court order appointing a replacement PR; an administration action where court takes over administration itself
184
How can a PR protect itself with court directions?
If foresee difficulties in administration can seek court guidance
185
What does s27 Trustee Act notice do?
Protects against claims by unknown beneficiaries and creditors. Does not protect against claim from known but missing beneficiary or creditor.
186
What does a Benjamin Order do?
Permits PRs to distribute estate on the basis that the missing beneficiaries have died (for known but missing)
187
What does Presumption of Death Act 2013 do?
PRs can make application for court order declaring that a person thought to have died or not known to have been alive for seven years or more has died
188
When will court make an order exonerating a PR?
If they acted honestly and reasonably; and ought fairly to be excused for the breach of trust & omitting to obtain directions of the court in the matter
189
Are clauses in a will limiting liability of executors enforceable?
To the extent they limit liability for negligence or honest mistake
190
What type of estates need grant of probate?
Deceased left a valid will; the will appoints executors; at least one of the executors appointed is going to act
191
What type of estates need a grant of letter of administration (with will)?
Deceased left a valid will but the will appoints no executors who are willing/able to act
192
What type of estate needs a grant of letters of administration?
Deceased died intestate
193
Assets that do not require a grant to deal with?
Assets which can be distributed under the Administration of Estates (Small Payments) Act; personal household possessions; cash
194
Which assets can be distributed under Administration of Estates (Small Payments) Act?
National savings, friendly society & industrial and provident society deposit accounts, arrears of salary & waves, pensions where deceased was member of police, fire, air force, army, building society accounts
195
What is a grant of double probate?
If more than 4 executors are named only 4 can be named on the grant, but power can be reserved so any remaining executors could apply at a later date if a vacancy arose and administration was incomplete
196
What happens following death of sole/last surviving PR?
Either chain of representation applies, or grant of letters of administration de bonis non is issued
197
What is the chain of representation & how does it apply?
If last surviving executor dies having appointed executor of their own estate & that person takes out grant of probate. Appointed executor automatically also becomes executor of original testator's estate & no additional grant is required
198
3 requirements for grant of letters of administration de bonis non?
The administration is incomplete; there are no remaining personal representatives; there has been a previous grant of representation
199
Statutory order of entitlement to be appointed as administrator under grant of letters of administration (with will)?
Executor, trustee of residuary estate, any residuary beneficiary, PRs of any residuary beneficiary other than trustee or life tenant of residue, any other beneficiary or creditor, PRs of any other beneficiary or creditor
200
Who in statutory order of entitlement to be appointed as administrator under grant of letters of adminsitration (with will) can apply?
First in hierarchy i.e. person cannot apply if someone in higher category is willing and able to act as administrator
201
What is "clearing off"?
Applicant for grant of letters of administration must explain why anyone with a better right to apply is not doing so
202
What must applicants prove for grant of letter of administration?
Must demonstrate nature of familial relationship with the deceased & have a beneficial entitlement under the estate
203
How many administrators are required if there are minor or life interests in the estate?
Two
204
When can an executor renounce their role?
Only if they have not intermeddled with the estate
205
Can an administrator reserve power?
No
206
How long can a PR delegate their functions to an attorney?
For a maximum of 12 months which can be renewed if needed, giving notice to the other administrators
207
When to do paper application for grant of representation?
Non-standard grants/complicated applications inc. second grant, where chain of representation applies, where original will is missing or has issues, grants to attorneys, grant under NCPR 20 if life interest arises
208
When is form PA1A used?
Application for grant of representation if deceased did not leave a will (NCPR 22)
209
When is form PA1P used?
Application for grant of representation if deceased left valid will (NCPR 20)
210
What must applicants do in application for grant of representation?
Confirm identity of deceased & applicants; justify type of grant requested & entitlement to act as PR; provide information about value of estate & IHT status, complete statement of truth
211
What is probate fee threshold?
Payable for estates worth over 5k, amount depends on whether professional is applying & value of the estate
212
What documents must be submitted with application for grant?
Certified copy of death certificate; original valid will if one is left; HMRC provide confirmation of IHT 400 by sending IHT 421 to probate registry; power of attorney if applicable; form of renunciation if applicable
213
What are legal requirements for making an affidavit?
Signed by all parties and dated; completed & signed by person witnessing (must be independent solicitor or commissioner for oaths) inc name address & qualification; must following immediately on from the text and not on a separate page
214
When is an affidavit required?
When there is a valid will but something about it renders its validity uncertain.
215
What can affidavit be used to confirm?
Due process; knowledge & approval; date; physical condition of the will; that there are no other docs missing
216
What to do if original will is missing?
Affidavit should be used to apply for court order to permit a copy of the will or codicil to be admitted to probate
217
What is the rule for repayment of secured debts?
If amount of outstanding loan is less than the value of the asset secured then no other estate assets can be used to repay the debt
218
What is statutory order for repayment of unsecured debts?
Property not disposed of by a will; residue; property the will sets aside; £ in the pecuniary legacy fund; property specifically given e.g. chattels
219
What is the doctrine of marshalling?
If PRs take assets out of statutory order to pay creditors, beneficiaries whose assets have been wrongly taken can compensate himself by going against the property which ought to have been used to pay the debts
220
What should be considered when PRs have a choice of assets to sell?
CGT implications of sale; how easily or quickly a sale can be carried out; wishes of beneficiaries
221
How must PRs deal with income tax & CGT?
Finalise deceased's IT and CGT position for tax year of death. Pay IT and CGT that becomes due during the administration period.
222
What is the rate of income tax for PRs paying estate income?
Basic rate, but not entitled to claim personal allowance
223
Minimum threshold for reporting estate income to HMRC?
No need to report if only source of income is savings interest of less than £100
224
Which gains are chargeable for CGT for PRs?
Only post-death gains ie. from date of death to date of sale
225
Who bears the costs of transfer for distributions?
Beneficiary unless otherwise provided in the will
226
General order for payment of legacies?
Specific, general, residuary
227
Can minor beneficiaries give good receipt for a distribution?
No
228
What is procedure for renouncing role as executor?
Deed of renunciation supplied to probate registry and remaining executor would need to send original will and the court fee for application
229
What is process for reserving power?
Desmond gives formal notice to Tara & includes it in application for grant
230
How to pay IHT before estate has been administered?
Direct payment scheme from bank, send IHT 400 and IHT 423 to bank & bank sends money to HMRC. Or if easily accessible chattels could use those
231
When can PRs entitled to claim their personal expenses?
When they are reasonably incurred
232
What is the capital account?
The value of the assets at the time of death
233
What is the income account?
Income that is accrued post death i.e. income that is received during administration
234
What is annual exemption for IHT?
£3000 transfers per tax year not chargeable
235
What NRB amount is considered for LCTs?
NRB amount at the date of transfer
236
What NRB amount is considered for PETs?
NRB amount at date of death
237
What is taper relief?
Reduction in amount of IHT due on transfers depending on how many years it occurred before death
238
What is general rule for liability for LCT?
The donee (or trustees) is liable to pay IHT
239
What happens if donor of LCT elects to pay IHT himself?
LCT is subject to 'grossing up' = original value is notionally increased
240
Where is IHT paid from by deceased's PRs?
Paid from the residue unless a contrary intention appears in the will
241
What is general rule for burden of IHT on assets that fall outside the succession estate?
Liability for payment IHT falls on beneficiary of the item
242
What is small gifts allowance?
£250 per recipient
243
What are 2 conditions for taper relief to apply?
A lifetime transfer was made 3-7 years prior to transferor's death; IHT is payable in respect of lifetime transfer
244
What is amount of taper relief discount for transfer 3-4 years before death?
20% discount (80% payable)
245
What is amount of taper relief discount for transfer 4-5 years before death?
40% discount (60% payable)
246
What is amount of taper relief discount for transfer 5-6 years before death?
60% discount (40% payable)
247
What is amount of taper relief discount for transfer 6-7 years before death?
80% discount (20% payable)
248
What are IHT exemptions available for lifetime transfers only?
Annual exemption, family maintenance exemption, small gifts exemption, marriage exemption, normal expenditure out of income exemption
249
4 types of loans which are restricted from IHT deductions?
Loans made to acquire, maintain or enhance assets that qualify for BPR; loans which are not repaid from the estate; loans made to acquire, maintain or enhance excluded property; loans which fund a qualifying foreign currency account
250
What is restriction on loans made for assets attracting BPR with IHT?
If loan made to acquire, maintain or enhance assets that qualify for BPR (or agricultural/woodlands relief) then costs of the loan must be set against the value of the qualifying assets = reduces value of assets which attract relief
251
What are rules for Gifts with reservation of benefit?
Property given away but retaining personal benefit is treated as remaining part of the donor's estate so it is taxed upon their death
252
2 situations where lifetime gift will be treated as GROB?
Where donee does not assume bona fide possession of the property at the start of the relevant period; at any time during the relevant period the property is not enjoyed to the entire exclusion of the donor
253
What is the relevant period for GROBs?
7 years before the donor's death
254
What are 3 requirements for having bona fide possession of a gifted property?
1. Obtain a vested, beneficial interest in the property; 2. Have actual enjoyment of the property; 3. Assume possession and enjoyment at the start of the relevant period
255
What if donor no longer retains benefit from GROB at the date of their death?
Treated as having made a PET on the date the reservation ceased (but does not benefit from Annual Exemption)
256
What is CGT effect of making a GROB?
CGT may be payable by the donor on the increase in value since they acquired it when they transfer it. CGT may also be payable if donee later sells the property on the increase in value between then & the date of the gift
257
What is pre-owned assets charge?
Annual income tax charge imposed on individuals who give away certain types of property during lifetime but subsequently obtain benefit from that property
258
What 3 types of property does POAC apply to?
Land, chattels, intangible property held in a settlor-interested trust
259
What are 2 conditions for land to be subject to POAC?
An individual occupies land; either 'disposal condition' or 'contribution condition' is met
260
What are 2 conditions for settlor-interested trust to be subject to poac?
Trust must be settlor-interested and trust property must include intangible property which was settled into the trust by the individual on its creation or subsequently added by them
261
How is POAC calculated?
By reference to the official interest rate that would be payable on the settled property/market rent
262
What are excluded transactions for POACs?
Transfers to spouse or civil partner; dispositions for purposes of family maintenance; annual small gift exemptions; arm's length sales; occupation 7 years after cash gift
263
What are 4 conditions for GAAR to apply?
There is arrangement giving rise to a tax advantage; the tax advantage relates to tax to which GAAR applies; arrangement satisfies 'main purpose' test (obtaining advantage is main purpose); arrangemenet is abusive
264
What is test for whether a tax arrangement is abusive?
Double reasonableness test: HMRC to show that entering into arrangement cannot reasonably be regarded as a reasonable course of action in relation to the relevant tax provisions, having regard to all the circumstances
265
What to do if tax arrangement caught by GAAR?
Taxpayer must counteract abusive effect by making "just and reasonable" adjustments
266
When are arrangements in respect of IHT notifiable as DOTA?
Arrangements fall within any description prescribed by HM Treasury regulations; arrangements enable any person to obtain advantage to tax to which relevant hallmark applies or arrangements are such that main benefit (or one of) is obtaining identified advantage
267
What are 2 conditions for IHT hallmark for DOTA to apply?
Main purpose (or one of) is to enable person to obtain one or more of specific advantages (avoidance or reduction specified IHT charges, avoidance or reduction of charges arising under GROB rules, reduction in value of estate which does not give rise to chargeable transfer); and arrangements involve one or more contrived or abnormal steps without which there would be no tax advantage
268
What is the tax benefit of a discretionary trust in will for testator's children?
When the child dies there is no IHT to pay in relation to the assets held in the discretionary trust
269
Does RNRB apply if deceased's residential interest passes to a discretionary trust?
No
270
What does 'letter of wishes' do?
Given to trustees to describe how testator would like the trustees to exercise their discretion
271
What is the purpose of a 2 year discretionary will trust?
Distributions from capital from trust deemed to have taken place under the deceased's will for IHT purposes meaning exemptions can be claimed
272
When does spouse exemption apply to life interest trust?
If spouse is the life tenant
273
What is the time limit for making a deed of variation?
2 years from date of death
274
What are 3 criteria for incorporating an unexecuted document into a will?
1. Document must exist when the will is executed (or when a later codicil is made)
275
Are letters of wishes legally binding?
No
276
Are amendments made to a will after execution valid & enforceable?
Generally no so unenforceable
277
What is the presumption on hand alterations to wills?
Rebuttable presumption that the alterations were made after the execution of the will
278
Are alterations valid if they are executed like a will (testator + 2 witnesses)?
Yes
279
What is presumption re blank spaces that are completed in wills?
Presumption that these occurred before execution
280
What is the effect of obliteration/covering up/cutting out of original wording of the will?
Obliteration is treated as having been made by the testator with the intention to revoke so the alteration will be effective
281
What is the effect of obliterations demonstrating conditional revocation where extrinsic evidence of original gift can be found?
Amendment is not given effect to
282
Can a codicil confirm unattested manuscript amendments?
Yes if expressly refers to the alterations it confirms
283
Can a will be revoked by writing 'revoked' on it?
No
284
What are requirements for revocation of a will by destruction?
Will is destroyed with an intention to revoke the will
285
Can a will be destroyed by someone other than the testator?
Only if done with testator's instruction and in their presence
286
What is presumption re missing will?
Testator is presumed to have destroyed it with intention to revoke it unless evidence suggests otherwise
287
What is presumption re damaged will?
Testator is presumed to have damaged/destroyed it with intention to revoke, unless evidence suggests otherwise
288
Who has the burden of rebutting a presumption of revocation?
Those administering the estate
289
What is effect if there are 2 valid wills & they are inconsistent?
Later will impliedly revokes the earlier will
290
What is effect of testator attempting to revoke their will contrary to previous agreement of mutual will?
There is a constructive trust over the testator's property on the terms previously agreed
291
What is the effect of a testator's marriage on a will made prior?
Automatically revoked
292
How to avoid automatic revocation of will if considering marriage (+ requirements)?
Can be drafted in contemplation of marriage. Must name future spouse & identify intended ceremony. Must expressly state whether or not testator intends will to be revoked on event of marriage.
293
What is effect of divorce on testators previously made will?
Court order confirming the divorce automatically operates as a limited/partial revocation of their will. As if the partner had died on the date of the court order.
294
When there is a will but it does not appoint executors (because they are divorced/died) - who is entitled to take out the grant?
The residuary beneficiaries
295
When does RNRB apply?
When main residence is going to direct descendant
296
Is a will torn into 4 pieces with intention to revoke at the time valid if testator changes their mind later?
Not valid - has been revoked by destruction (intention at the time + destruction)
