Wills 2 Flashcards

Question

Primary duty of PRs?

Answer 1

collect and get in the real and personal estate of the deceased and administer it according tot he law statutory wording just distribute and administer i guess

Answer 2

Personally liable (to that person)

Answer 3

Follow s 27 Trustee Act: - Advertise notice of intended distribution of estate in: A) Gazette; B) any newspaper in relevant district of deceased; and C) if special case, any notices that court may require if unsure which notices to give, can apply to court ^ requires any interested person to send notice of their claim - Wait at least 2 months before distributing estate - Must still make searches would if was purchasing land so can tell if anyone with interest in deceased's land (e.g. Land Charges search)

Answer 4

yes can get property from hands whoever received it, unless they are a purchaser (but PR/trustee won't be personally liable)

Answer 5

People who KNOW they have a claim but can't find

Answer 6

Personally liable if assets distributed then get order Wait 6 months from grant If earlier distribution required, retain sufficient assets

Answer 7

a) immediately on death (authority comes from will) b) when grant representation issued

Answer 8

Ownership of estate's assets transferred to PR (on death for executors or on grant for administrators)

Answer 9

Bank loan IHT first proceeds undertaking Outstanding debts and funeral account Administration expenses (eg valuers fees) as they arise SEU Secured Expenses (funeral, administrative) Unsecured

Answer 10

1. Provisions of **will** itself - may direct where to pay from - usually residue - if no provision, **follow statute ** - generally shouldn't use specific legacy if avoidable (sep queue card) 2. Beneficiary wishes - although have power to sell what want, **good practice** to consider beneficiary's wishes 3. **Tax** implications of sale eg capital gains

Answer 11

Reasonable - reasonableness depends on facts of case eg deceased's position

Answer 12

Only to extent of the available assets left by deceased to make the payment

Answer 13

Those INCIDENTAL to PR duties Include: 1. Costs of obtaining grant 2. Costs of collecting and preserving deceased assets 3. costs of administering estate eg solicitors/valuers fees 4. **IHT** payable on **property in UK** which VESTS in PRs (not survivorship property - can try to reclaim reimbursement if paid from joint owner but practically diff unless they are a beneficiary)

Answer 14

Where sufficient assets to pay all expenses, debts and liabilities in full EVEN if nothing left to pay beneficiaries with

Answer 15

- Beneficiary taking the asset responsible for paying debt ^ UNLESS there is a contrary INTENTION in any other document - for there to be intention, must be express reference to the secured debt (eg mortgage) - eg "my cottage to my daughter free of mortgage" - eg "mortgage will be paid from residue "Pay debts out of residue" -not suffice - presume pay debts **other than** secured

Answer 16

"Statutory order" *baso undisposed and then residue before property for legatees* Unless will varies it: 1. Property **UNDISPOSED** of ^ this includes a gift which has **failed** 2. Property in **residue** 3. Property **SPECIFICALLY** GIVEN for payments of **debt**. i.e. directed to use that specific asset but says nothing about left over money (eg debts are to be paid from proceeds of sale of X Co shares) 4. Property CHARGED with payment of debts - charged means direct to be used for paying debts but any LEFT OVER to someone - e.g. debts paid from proceeds of X Co and balance to John 5. Any **fund** retained to meet **pecuniary** legacies 7. Property specifically **devised** (real property) or **bequeathed** (personal property), **rateably** according to value 7. Property appointed by will under general power rateably according to value

Answer 17

If expressly releases property otherwise taken in priority COMMON: - debts and expenses payable from residuary estate e.g. - subject to tax: IHT payable FROM asset - FREE from tax = IHT payable as a testamentary expenses

Answer 18

Not enough assets to pay funeral/testamentary expenses and debts Creditors won't be paid in full (or at all) Beneficiaries receive nothing

Answer 19

Sell the property by exercising power of sale as chargee

Answer 20

1. Secured creditors (eg hold a charge or mortgage) (eg cos can exercise right of sale) 2. Testamentary, funeral and administration expenses 3. Unsecured creditors - rank and abate equally

Answer 21

A) freehold or leasehold land/interest - **ASSENT** - writing - signed by **PRs**, - name person to vest in (even if PR transferring to self as trustee) - person vests in must send to LR - deed not required but defo should if indemnity B) stock transfer form - PRs show grant to co - Transfer as 'PRs of the deceased' - Receiver must apply to co to be registered C) personalty - PRs pass title via ASSENT - no particular form required - property passes on delivery - title derives via will (assent just gives effect to that)

Answer 22

**Specific gifts only** (they always vest retrospectively) (i.e. of specific item - land/personalty - not residue/pecuniary) Means any **income** generated from the property belongs to beneficiary (eg dividends) But beneficiary will not be entitled to the income as it arises - must wait until trustee vests property in them Will pay **income tax** that has become due since death

Answer 23

The legatee for all Should reimburse for expenses on transferring and insurance, unless will states otherwise

Answer 24

Pay from residuary estate, with any personalty (in residue) being used in preference to realty (in residue) *e.g. residue contains football and a house. use the football first.* If partial intestacy cos gift residue fails, likely pay from **u****ndisposed property**, with ready money (ie not personalty/realty - money in bank account etc) used first (nb this is an unclear area of law)

Answer 25

General rule = end of executor's year (ie one year after testator's death)

Answer 26

Entitled to interest by way of compensation Will be payable at rate stipulated in will or if not, rate payable on money paid into court (see diff queue card for when this will be calculated from)

Answer 27

general rule = begin to pay interest if not paid by **end of executor's year** EXCEPTIONS: 1. will says legacy payable **'immediately on death'** or some future date/event - then pay from the **following day** (ie day after should have paid) 2. must be paid on **date of death** (instead end executor's year) if the p legacy is: 1. in **satisfaction of debt** of T to creditor; 2. **charged on land** owned by testator; 3. payable to testator's **minor child** - unless other funds exist for their maintenance; 4. payable to **any** minor where **intention** of that legacy is **maintenance**

Answer 28

1. Discovered additional assets or liabilities 2. Discovered lifetime transfers 3. Agreement of provisionally estimated values (eg with HMRC on value of shares) 4. Agreement with HMRC re tax owe or tax rebate due (re deceased's income and capital gains before death) 5. Sales made before deceased's death which gave rise to IHT 'loss relief' claim

Answer 29

1. Assets with fluctuating value (eg shares and land) - If PRs had to sell for less than would have been worth on date of death (probate value) - 'loss of sale relief' can reduce IHT liability here (that's all it says) (might be the same as the below textbook not clear - main thing is below) 2. 'Qualifying investments' - shares or securities in **quoted** companies or recognised stock exchange - sold within **12 months** of death for **less than probate value** - **sale price** can be used as probate value and IHT reduced accordingly - must apply (not automatic) - only applicable when it is PR (not beneficiary) who sells

Answer 30

PR remains personally liable Consider retaining enough assets to pay IHT if this happened

Answer 31

If unpaid by donee in 12 months after end of month when donor died Limited to amount of deceased's assets which they have received or would have received if not for own neglect/fault above also apply if reservationary interest retained by testator (we know this) Consider retaining enough in estate to cover in case this happens.

Answer 32

Once all variations to accounts are known and reliefs quantified, report corrective account to HMRC (ie all outstanding matters)

Answer 33

Request CERTIFICATE OF CLEARANCE from HMRC Releases all persons from further liability to IHT (unless fraud etc) HMRC must be satisfied IHT re a CHARGEABLE TRANSFER has or will be paid

Answer 34

Immediately following death From 6 April before death and ending with date of death even if died during the income tax year, can still claim reliefs and allowances would have been entitled to if survived the whole year

Answer 35

Any tax owed will be deductible from amount of IHT (tax is deductible remember!) Any tax refund will increase size of estate for IHT (because it's an asset!)

Answer 36

Income tax On any income paid into estate DURING the administration (eg if property let out to tenants who continue to pay rent to the estate)

Answer 37

Put it in a savings bank account where it can earn interest They would be expected to this tbf!

Answer 38

Dividends - 8.75% Other income - 20% Do not pay at higher rate But do not benefit from allowances (eg personal allowance)

Answer 39

only income of the estate is interest which does not exceed £500 - that money will go to the relevant beneficiary instead (eg interest on a bank account)

Answer 40

for **interest** **PAID** on a bank loan if needed **loan** to be able to pay **IHT** (which needed to obtain grant)

Answer 41

yes if they receive remaining net income from estate once PRs have settled the tax NB they will receive credit if the tax declared already been paid by PRs (textbook if confused: Once the PRs’ tax position has been settled, the remaining net income will be paid to the beneficiary. The payment forms part of the beneficiary’s income and the gross amount should therefore be included in their return of income for the income tax year to which it relates. The beneficiary receives credit for the tax already paid by the PRs. Whether there is any more tax to pay, or, indeed, whether a refund can be claimed, will depend on the beneficiary’s own income tax position.)

Answer 42

- not payable on death (wipes out gains accrued during deceased's lifetime) - only if PRs make a disposal (but even then, they acquire at probate value instead of value deceased originally purchased for) - if PRs transfer assets to beneficiaries, they do not make a disposal

Answer 43

20% Unless resi - 28%

Answer 44

- annual exemption 6k ^ in tax year of death and for the 2 following tax years (if admin lasts this long) (so if died in 2025, also use in 2026/27) can also deduct: - acquisition cost (ie probate value) - incidental costs of disposal - **proportion** of fees for valuing estate e.g. probate value 34k. Sold for 50k. = gain of 16k. minus 6k (annual exemption). x 0.2. = 2k yeah i get this

Answer 45

Market value on date of death i.e. probate value

Answer 46

(If PRs sell for less than probate value, they make a loss. If sell for more, capital gain.) Can set losses against gains made in same or any future tax year in administration period. If already set against all gains, consider: 1. Selling other assets (so can set against their gain) 2. Transferring property worth LESS to beneficiaries (since beneficiaries will be deemed to acqurie at PROBATE value - they could sell it future at a loss if not inc in value and set that against any other gains they made). it is a hard point but i get it now !

Answer 47

**must** always **calculate and pay** for each income tax year in administration period but can **make informal payment w/o need to provide tax return ** **unless** is a **COMPLEX** ESTATE (need to do a return) i.e.: 1. value of whole estate is over **£2.5 mil**; or 2. **OVER 10k** tax due for whole administration period; or 3. value of **assets sold** in tax year exceed 50k

Answer 48

Income tax and CGT usually one lump sum at end of administration period (unless estate is complex) CGT on resi = 60 days of completion

Answer 49

transfer to trustees to hold on their behalf until satisfy contingency

Answer 50

yes to both unless vested and: - express clause accepting receipt from minors - giving to parents/guardians on their behalf (allowed unless excluded in will)

Answer 51

Any interim distributions which those beneficiaries already received on account of their entitlement if already received a bit of what they are owed, then don't transfer them as much as would otherwise common sense

Answer 52

For approval of residuary beneficiaries Done at end of administration Shows: - assets of estate - payment of debts - admin expenses/legacies - any interim payments - balance for residuary bens R bens must sign to approve

Answer 53

Residuary beneficiaries Releases PRs from further liabilities to ACCOUNT to beneficiaries Unless fraud or failure to disclose assets

Answer 54

If there is a life or minority interest, bcos the different interests of the beneficiaries in capital and income need to be distinguished throughout period of trust and when it ends (checked this it makes sense don't go back to textbook)

Answer 55

1. Secured debts 2. Unsecured debts

Answer 56

I think specific not rly imp remember this being a point in wks

Answer 57

Probate value (market value date of death) remember no CGT payable on transfer from PRs to beneficiary - beneficiary will just be liable for CGT if they sell

Answer 58

s31 - income s32 - capital

Answer 59

Yes Will be a secured debt (against the property) Entitled to be paid £275k from proceeds of sale of house Which means the assets available (to pay beneficiaries etc) from the house are actually £25k

Answer 60

BEFORE e.g. 15,000 - 6,000 = 9,000 9,000 x 0.2 = 1800 - just the year u sell it - but if have any unused from previous years, can carrry forward indefinitely - but use this years first

Answer 61

1. Spouse 2. Child (any age, including adopted) 3. Former spouse who has not remarried, unless court order on divorce/nullity barred this 4. Treated as child (eg step-child/cohabitee's child) - must still prove acted as parent 5. Maintained wholly or partly by financial contributions by deceased, immediately before death - strong grounds - substantial contribution 6. Lived with deceased continuously for 2 years prior to death as if were married (cohabitees)

Answer 62

No, if employed and likely earn for foreseeable future, unlikely application succeed without: - moral obligation owed by deceased - disability - worked for deceased for years at low wage; or - made sacrifices to care for deceased Moral Disabled Worked Sacrifices MDWS - Mel Darren Wilf Sara

Answer 63

Maintained wholly or in part Significant financial contributions Towards reasonable needs Immediately before death - not construe literally - general arrangements during deceased's lifetime - temporary break immediately prior to death (eg while in hospital) doesn't prevent a claim eg rent-free accommodation Not if commercial agreement (eg live-in carer)

Answer 64

1. Same household as one unit (not where living under 2 roofs as separate entities) - but CAN live in 2 physical properties, as long as live as if you are 'a household' (nature of reli) 2. As if married couple - whether reasonable person with normal perceptions would regard as such - absence sex doesn't preclude - relationship must be openly acknowledged 3. Two years immediately prior to death - temporary separation immediately before death (e.g. hospital) doesn't disqualify - degree permanence and commitment e.g. walked out temporarily but always went back, apart for 3 months immediately before he died, could still bring claim bcos text her daughter asking her to come back but she didn't pass on message - if daughter had passed on, would have got back with him - so even tho lived apart for last 3 months, continued to be part of 'household'

Answer 65

6 months from date of GRANT Court discretion to extent if good reason for delay eg coma Considers - merits of claim - promptness - whether estate been distributed - did PRs have notice within time limit - would applicant have other remedy (eg solicitor negligence)

Answer 66

GROUND: **Estate doesn't leave** REASONABLE FINANCIAL PROVISION Objective test - reasonableness of deceased irrelevant 1. 'SURVIVING SPOUSE standard' - reasonable provision whether or not needed for maintenance - consider how much expect on divorce 2. 'ORDINARY standard' (all other applicants) - reasonable provision for MAINTENANCE - i.e. living expenses / not anything desirable eg rent, food bills - caution if adult applicant CAN work In determining reasonable provision, consider general guidelines (sep card) - size and nature/needs of beneficiaries)

Answer 67

N O S Disability Conduct Objective test 1. **Financial *needs*** of applicant, other beneficiaries and applicants now and in future - inc effect order on any state benefits applicant receives 2. **Legal and moral** ***obligations*** of deceased to applicant and beneficiaries - legal eg child maintenance - moral for adult child may be illness prevents working etc - moral eg wife left all to her husband. mutual understanding he would give all his to daughter. he remarried and gave all to second wife. 3. **Size and nature** of estate (don't want to swallow it up) 4. **Physical or mental disability** of applicant inc depression/illness 5. Anything else relevant, inc applicant's ***conduct*** eg prolonged period of estrangement - see sep card

Answer 68

Their entitlement under the will itself is forfeit HOWEVER could still bring claim under Inheritance (Provisions for Dependents Act) - but guideline 'anything else which may be relevant, including conduct' allows court to dismiss claim

Answer 69

- Reasons given by testator in will/other doc (court discretion how much weight - consider along other factors) - Murdered deceased (forfeit under will but can claim under act) General: - conduct eg period of estrangement WIDE discretion court how much weight to attach (may reduce amount get - e.g. estranged from mother for years and her wishes to exclude etc were considered and reduced entitlement - but still received some)

Answer 70

Net estate i.e. value after debt, expenses and allowable deductions COULD INCLUDE DECEASED'S INTEREST IN JOINT PROPERTY (ie survivorship property) **good that it is from net i guess would be waste of time if awarded but all swallowed up by debts anyway**

Answer 71

inter alia - transfer specified property - lump sum - periodic payments Will also order which beneficiary likely to suffer burden of the order (ie lose property which applicant will received) (remember order made against net estate)

Answer 72

Altered estate takes effect from death so may have to recalculate eg if increases amount going to spouse - more spousal exemption

Answer 73

No Court can avoid gifts made **less than 6 years** before death which had **intention of defeating claim** under the Act Property would become part of net estate from which claim could be satisfied NB: not 7 years like if LCTs/PETs

Answer 74

- if feel someone missed out from will so gift their gift to them - give their gift to applicant under Inheritance (Provisions for Dependents) Act (to avoid litigation) - make more tax-efficient

Answer 75

Disclaimer - reject and passes as if beneficiary deceased Variation - can direct where benefit goes and on what terms Lifetime gift - accept then gift it

Answer 76

- must disclaim whole of gift, not part - can't disclaim once accepted benefit (since then it would be a gift really) - would only use if want to go to whoever entitled (if they had deceased)

Answer 77

*18 or over with mental capacity* if not legally capable ^, court application (notice that doesn't refer to parents accepting) **Court can consent for them** Application expensive and timely NB: restrictions re disclaimer's don't apply (e.g. that cannot have accepted/cannot be over part)

Answer 78

As if beneficiary had made a lifetime chargeable transfer to the new beneficiary So would become chargeable to IHT if original beneficiary dies in 7 years Means would be taxed twice - on testator's death and new beneficiary's death

Answer 79

Disclaimer or variation read back into the will Conditions - disclaimer or variation must be: 1. in writing and signed by original ben; 2. within 2 years of DEATH; and 3. not for monetary consideration. AND if VARIATION, must state s 142 IHTA applies (!!!!) If more IHT payable due to variations, PRs must join the written variation.

Answer 80

Read back into will Same requirements as for IHT (writing/signed by ben, no monetary consideration, within 2 years) Means no disposal so no IHT

Answer 81

Sometimes will increase IHT eg wife varies for children, lose spousal exemption sometimes may have signif impact cos gone from having no IHT chargeable to all chargeable, so that tax bill would deplete entire estate INSTEAD may be best to do as lifetime gift but be aware that becomes chargeable on death

Answer 82

in theory yes no need because given whole estate so completely pointless (in the sample Q they answered as if that person could not make claim - even tho could in theory)

Answer 83

accepted eg by taking income from it (WKS thinks that administration concluding would count as accepting)

Answer 84

Yes Can't deliberately give assets to another by defeating inheritance act claim Court can reverse it

Answer 85

bcos it is POSSIBLE for the to bring a claim

Answer 86

Yes Have powers to make against 'net estate' so includes property which passed via survivorship

Answer 87

12 years from date of right to receive estate No time limit for fraudulent breaches or taken property from estate for own use

Answer 88

18+ and informed consent to breach

Answer 89

Legal obligations - eg child maintenance Moral - eg adult child - maybe illness prevents working - eg wife left all to her husband. they both had an understanding that he would give all his estate to daughter. he remarried and gave all to second wife.

Answer 90

Spouse: - applicant's age, length of marriage, familial contributions, likely divorce settlement e.g. looking after children, duration of marriage, likely divorce settlement - Cohabitant: age, length of cohabitation, contribution to welfare of family (inc looking after home/caring for fam) - Child: education and training requirements e.g. adult child - estranged 26 years. went to animal charities. mother statement explained why excluded daughter. daughter had 5 kids / state benefits. still awarded 50k.

Answer 91

A variation can apply to some or all of the inherited assets (I think) Disclaimer - can only disclaim whole (not part)

Wills 2 Flashcards

(116 cards)