Wills & Probate

Question 1

What is a Deed of Variation?

Answer 1

• Allows B to redirect interest in estate and specifying who receives it
  *To ensure this doesn’t impact IHT and CGT negatively, the Deed should explicitly incorporate s142(1) IHT Act 1984 and s62(6) Taxation of Chargeable Gains Act 1992
• Must be in writing, specific subject matter and objects, be made within 2 years of death and not be made for consideration

Question 2

How might a Deed of Variation affect IHT?

Answer 2

*If directed to an exempt B (e.g. spouse or charity) = no/reduced IHT
* If 10%+ directed to charity, IHT rate will be reduced to 36%

Question 3

What is the taper scale in regards to lifetime gifts?

Answer 3

• 0-3 years before death = 100%
• 3-4 years = 80%
  *4-5 years = 60%
• 5-6 years = 40%
• 6-7 years = 20%
  *More than 7 years = no tax

Question 4

What is Quick Succession Relief?

Answer 4

• Relief on IHT where a A’s estate left chargeable transfer to B which was included in A’s IHT
  *Where B dies within 5 years, the amount of IHT paid on the transfer is reduced from B’s gross estate by dividing A’s IHT-less estate by A’s gross estate then multiplying figure by tax paid
• Tapers in 20% decreases from 1 year to 5 years
  e.g.
  A passed his whole estate of £350k to B and paid £10k IHT
  B passes away 2 years later with an estate of £400k
  Calculation:
  £350k - £10k = (£340k/£350k) x £10k = £9,714.30 x 0.8 (80%) = £7,771.42 - this number would be subtracted from the total IHT B’s estate must pay

Question 5

What is the presumption as to effect of gifts to spouses?

Answer 5

• where absolute gift given to spouse but then also gives an interest in the property to issue, rebuttable presumption that gift to spouse is absolute
• This is opposite to presumption for others; where absolute but then says to be held on trust, will be trust as long as effective otherwise will revert to absolute gift

Question 6

When is an estate considered excepted?

Answer 6

SIMPLE
* Small estate - below threshold
* IHT-free e.g. everything passes to spouse/charity and less than £3mill)
*Mainly UK assets (foreign must be below £100k)
* Previous gifts limited to £250k
* Lived outside UK (UK Assets < £150k)
* Exempt threshold unused (spouse total of £650k)

Question 7

What is the entitlement of grant where will is annexed?

Answer 7

Rule 20 Non-Contentious Probate Rules
* Trustee of Residuary estates
* Residuary beneficiaries (including if passed in partial intestacy)
* PRs of residuary beneficiaries
*Any other beneficiary/creditor
* PRs of any other B or C

Question 8

What is the entitlement of grant where there is no will?

Answer 8

Rule 22 Non-Contentious Probate Rules
*Spouse
* Children
* Parents
* Siblings then half-siblings
* Grandparents
* Aunts/Uncles then half
* the Crown
* Creditor
(to act must have entitlement in the estate through intestacy rules)

Question 9

When may affidavit of due execution be required?

Answer 9

*Problems with attestation clause; signature imperfect or unusual placement
* Doubts about capacity; needed from doctor

Question 10

When may affidavit of knowledge and approval be required?

Answer 10

*Blind, Illiterate or Suspicious Circumstances (e.g. B prepared the will and benefits substantially) or signed by someone on behalf of the testator
* Can be bypassed with an appropriate attestation at time of signing

Question 11

When may an affidavit of plight and condition be required?

Answer 11

*Attempted revocation; scorch marks or will cut/damaged or later will etc anything that would indicate there was a possible attempt of revoking
* Interference; alteration or obvious mark showing a document was previously attached

Question 12

What is a Grant De Bonis Non?

Answer 12

• It is the new grant of probate when an executor (B) has taken out probate for A, but dies before completing administration, and his own estate does not have an executor
• If the executor’s estate has an executor then the chain of representation is maintained and B’s executor will administer both B and A’s estates

Question 13

What are reasons that a will is recommended?

Answer 13

• ability to choose executors and trustees;
• appointing guardians to look after those under 18;
  *control over who benefits from the estate and what amount they benefit rather than relying on the intestacy provisions;
• ensuring those who wouldn’t usually benefit under intestacy rules do get a benefit;
• mitigating any inheritance tax payable on the estate;
• appointing individuals who can deal with business

Question 14

What monies can be obtained on the production of just the death certificate?

Answer 14

*Money held with National Savings and Investments
* Up to £5,000 case/assets unless institution requires grant
* For some funds above this amount, some financial institutions may accept statutory declaration but not guaranteed - safest to advise that grant will be needed

Question 15

What are the usual liabilities that a bank will release without grant of probate?

Answer 15

*Funeral expenses and IHT in the form of cheque (or for HMRC may be paid directly)

Question 16

What information will initially be required for administration of estate?

Answer 16

• Details of the deceased
  *Details of personal representatives
  *Gather all assets
• Ensure valuation of estates are up to date - at time of death
  *Liabilities at time of death
  *Lifetime transfers in past 7 years
• Death certificate
  *Will and any codicils
• Any relevant paper work (title deeds and insurance)