Wills and administration unit 4

Form PA1P

On behalf of the administrators you would have to submit a Form PA1P, signed by x and y , together with the original will and the probate fees (Given the number of residuary beneficiaries and the minority interest the application cannot be made online). The Form IHT421 confirming payment of IHT will be submitted by HMRC direct.

Rule 20 provides:

Where the deceased died on or after 1 January 1926 the person or persons entitled to a grant in respect of a will shall be determined in accordance with the following order of priority, namely— (a) the executor ... ; (b) any residuary legatee or devisee holding in trust for any other person; (c) any other residuary legatee or devisee...

A man's valid will appoints his fiancée to be his sole executrix and trustee. She is also appointed the residuary beneficiary if she survives him by 28 days. There is no substitutional gift of residue. The will also left a specific gift of £5,000 to his best friend. The man has no living relatives apart from his father to whom he has not spoken for many years. The man has just died in an accident. His fiancée was critically injured in the same accident and died in hospital two days later having never regained consciousness. Will the man's father be best entitled to apply for the grant of representation?

Yes, because the father is entitled to the residue as there is a partial intestacy. The residuary gift has failed. This gives him the best right to apply for the grant. the man's father is the only living relative and therefore will inherit the undisposed of residue under the intestacy rules. This gives him priority under rule 20 NCPR to apply for the grant as the executor and trustee of the residue has died.

A woman died two months ago without having made a valid will. Her net estate for probate purposes is valued at approximately £1,300,000. Her personal chattels are valued at £45,000. She is survived by her husband (aged 62) and her two adult children aged 31 and 35 years old respectively. The woman has no other surviving relatives or dependants. Will two administrators be required when applying for a grant of letters of administration of this estate?

No, one administrator will be sufficient because the husband and children will receive absolute interests from the estate and they are all over the age of 18. there is only a requirement generally for a minimum of two administrators where there is a life interest or property is passing to a minor, and here the whole estate passes to the husband and children.

20 working days after submitting the IHT400 the firm will apply for the grant online by

1. Completing the online form via their myHMCTS account 2. Paying the probate fee 3.Submitting the original will (and, as directed online, any other supporting documents required) accompanied by the coversheet generated online (The Form IHT421 confirming payment of IHT will be submitted direct byHMRC)

Despite lacking qualifications or expertise, an executor of an estate played the stock market with the estate's investments, causing a loss to the estate. Which of the following best describes the action the beneficiaries could take to recover the loss to the estate?

Bring a devastavit claim against the executor. The beneficiaries can bring an action for breach of duty, as the executor was negligent in his investment duties.

A man set up a discretionary trust five years ago for his nephews, appointing his wife and his accountant as trustees. The trust contained no express provisions relating to the appointment of trustees. The settlor's wife died last month and is to be replaced as a trustee by the settlor's brother. Which of the following explains how best to effect the appointment of the brother as the new trustee?

Draw up a deed of appointment of a new trustee and arrange for it to be executed by the accountant as the continuing trustee. Where a trustee is to be replaced (and there is no express provision in the trust instrument governing who has the power to appoint a new trustee), the appointment will be a statutory one under s.36(1) Trustee Act (TA) 1925. The appointment must be in writing (preferably by deed) executed by the continuing trustee(s) of the trust.

Give up probate executor rights: Form PA15

For executors to give up their legal responsibility and role permanently (also known as 'renunciation') to apply for probate

not an excepted estate (IHT is payable)

IHT400 must be sent to HMRCtogether with a cheque for the IHT due

In a will containing only standard administrative provisions a testator appointed a family friend as executor. The beneficiaries under the will are the testator's three children, aged 21, 19, and 17. The estate included a holiday cottage which the executor put up for sale to fund the inheritance tax due on the estate. After a couple of months, the cottage was still unsold. The executor then bought the cottage at market price, having first obtained the beneficiaries' consent. A few months after completing the administration of the estate and distributing the assets to the beneficiaries, the executor sold the cottage at a profit. Can the beneficiaries take action against the executor to recover the profit made on the cottage?

PRs are fiduciaries and must account for any unauthorised profit even when the estate has suffered no loss

How to stop a grant from being issued?

Steps need to be taken to stop the grant being issued. You should therefore lodge a caveat on x's behalf. Once a caveat has been entered, no grant can be issued until the caveat is removed or ceases to be effective. This will afford the court time to decide on the validity or otherwise of the will. An application for a caveat can be made using form PA8A which can be completed online or by post. A caveat lasts for six months although its duration can be extended

The trustees are running a discretionary trust for the children, nephews and nieces of the settlor. Over the past five years, they have distributed approximately half of the trust fund to the settlor's children, but have made no distributions to the nephews and nieces who are surprised by this omission. Before they make any formal complaint, the nephews and nieces want to know what documents they can obtain from the trustees. What documents must the trustees provide to the nephews and nieces?

The Trust Deed, the trust accounts and a current schedule of investments. The objects of a discretionary trust are entitled to see the trust deed, the accounts and a list of the trust's investments.

Executors obtained a grant of probate of a man's will one year ago. The will divided the man's estate between his widow and son. None of the estate has been distributed and the executors say that they no longer wish to act. What is the best way for the widow and son ('the beneficiaries') to replace the executors?

The beneficiaries should apply to the court. Once personal representatives ('PRs') have taken the grant, they cannot retire. The beneficiaries can apply to the court to replace the executors under s50 Administration of Justice Act 1985.

A testator died last week. In his valid will, he appointed his solicitor as his executor and, apart from a pecuniary legacy of £10,000 to his adult niece, he left his estate to be divided between his brother and sister. The solicitor predeceased the testator. Everyone else mentioned in the will survives. The testator's wife also survived him. Which of the following best describes who will be entitled to take a grant of representation and which type of grant is appropriate?

The brother and sister will be entitled to take a grant of letters of administration with the will annexed. The grant will be a grant of letters of administration with the will annexed because the deceased left a will but no executor is able to act. Under Non-contentious Probate Rules 1987 rule 20, residuary beneficiaries (the brother and sister) have the best right to the grant under category (c).

A testator died last month. By his valid will, he gave a small legacy to charity and left the remainder of his estate to his son who was also appointed sole executor. The son died two months before the testator. The testator's only surviving relatives are his brother and sister. Shortly after the testator's death, the sister paid a debt the testator had owed to a mutual friend, intending to recoup it later from the estate. A few days later, the sister formally renounced her right to take a grant of representation. Which of the following best describes who is entitled to take out a grant of representation and the type of grant they will need?

The brother can take a grant of letters of administration with the will annexed. A grant of letters of administration with the will annexed is required as the deceased left a valid will but there are no persons able to act as executors

A man died last month. In his valid will, he appointed his son and his daughter to be his executors and left them his entire estate apart from a legacy of £10,000 to his grandson, now aged 16. The daughter will be working abroad for the next three months. She asks whether the son can take out the grant alone with a view to the daughter helping to administer the estate later. Which of the following best describes the most appropriate course of action?

The daughter should reserve power. it is the best course of action because it allows the son to take the grant of probate on his own but the daughter can join in the administration later by taking a grant of double probate.

A grandmother died and in her will she created a trust which is being held for such of her three granddaughters as attain the age of 21. The trust assets consist of shares which are worth £150,000 and produce £6,000 worth of dividends per annum. The granddaughters are 10, 12 and 18 years of age. The trust was created after 1 October 2014 and the will does not modify or exclude any of the trustees' statutory powers. Which of the following statements best describes the eldest granddaughter's entitlement?

The eldest granddaughter should be receiving £2,000 per annum from the dividend income. Once the eldest granddaughter reached 18 years of age, she should be paid the income from her share of the trust property i.e. one third of £6,000. This is in accordance with s31 Trustee Act 1925 (TA) and the trustees have no discretion over this.

gross probate value of the estate?

The probate estate is comprised of the assets that pass under the grant, that is all the assets listed above except for the life interest.

A man made a valid will five years ago, appointing his wife and his sister as his executors. Under the provisions of the will, the man's estate passed to his wife, but made no substitutional gift. The man died last month (with an estate of £900,000) and is survived by his two children, and by his sister, all aged 18 or over. The wife died two years ago. View less Who has the best right to take a grant to deal with this estate?

The sister. the sister was appointed as executor in the will, which is valid. As such, she has the best right to take a grant of probate.

A man (deceased) left a home-made will appointing his two sisters as executors and trustees and giving everything to his children contingent on reaching the age of 25. He has three children, aged six, 10 and 12. The will contained no other provisions, but was correctly executed. Which of the following statements best describes whether the sisters can release income or capital from the trust?

The sisters can, at their discretion, apply income for the maintenance, education or benefit of any of the three children. The Trustee Act 1925 s31(1)(i) allows trustees to apply income for minor beneficiaries for their maintenance, education or benefit, at the sole discretion of the trustees, but such amount must be reasonable in all the circumstances.

A woman dies leaving a valid will. Her will appointed her husband to be her sole executor and contained a clause leaving her entire estate to her husband but if he predeceased her then to her children in equal shares. The husband died two years prior to the woman's death. The woman is survived by her two adult daughters and two grandchildren aged 14 and 12 years. The woman's son, the father of her two grandchildren, died one year ago. Which of the following best describes the procedure for obtaining the grant of representation for this estate?

The two surviving adult children can together apply for a grant of letters of administration with the will annexed by submitting form PA1P to the Probate Service. . The sole executor appointed by the will has predeceased the testator. The two surviving adult children are residuary legatees and therefore entitled to apply for the grant under the NCPR 1987 r.20. It will usually be necessary for them both to apply as the will creates minority interests (the grandchildren will inherit their father's share of the estate under s33 Wills Act 1925). As the sole executor appointed by the will has predeceased the testator, the correct grant is the grant of letters of administration with the will annexed. The correct form for submission to the Probate Service is the PA1P (as there is a valid will).

A man created a trust and appointed two people to act as trustees for "such of my children who attain the age of 21 years". The beneficiaries under the trust are aged 18, 19 and 21 years of age. The beneficiaries have fallen out with one of the trustees and would like to force them to retire. The declaration of trust contained no express provision dealing with the appointment or retirement of trustees. What advice should be given to the beneficiaries?

They are able to direct the trustee to retire by way of a written direction. They would also have to direct that someone else be appointed as trustee in their place. The beneficiaries can direct a trustee to retire if the conditions set out in s19 of the Trusts of Land and Appointment of Trustees Act 1996 are met. In this case, they are all of full age and capacity and are together absolutely entitled to the trust fund, as the 21 year old has satisfied the contingency. They would need to appoint a replacement as there must be at least two trustees left once the outgoing trustee retires.

The personal representatives of a deceased testator's estate have completed their preliminary assessment of the assets and have calculated that there is an Inheritance Tax liability of £40,000. The only asset of the deceased testator is a building society account containing £100,000. The personal representatives do not yet have a grant of representation. What action can the personal representatives take in relation to the Inheritance Tax?

They can ask the building society to pay the Inheritance Tax under the Direct Payment Scheme. it is possible for personal representatives to ask a building society to use the direct payment scheme.

A testator died recently. His valid will left his entire estate to his only daughter. He left the following assets: Personal belongings worth £2,000 Shares (small holdings in various quoted companies) worth £1,000,000 Cash in accounts worth £1,000 Life policy on the testator's life written in trust for his daughter worth £500,000 The personal representatives have not yet obtained the grant and a substantial amount of inheritance tax ('IHT') is payable on this estate. Which of the following would be the best way to fund the IHT?

Use the proceeds of the life policy. the proceeds of the life policy written in trust can be obtained without a need to obtain a grant, and without significant cost.

A UK domiciled man (the Deceased) recently died. His valid will left his estate to his children. His wife died five years ago, leaving everything to him apart from charitable legacies totalling £50,000. The Deceased's estate consists of: £ Quoted Investments 200,000 Bank Accounts 90,000 Personal Chattels 20,000 The Deceased also owned a house (valued at £400,000 at his death) jointly with his sister. the remainder interest in a trust fund created in his late uncle's will. The life tenant is still alive and the trust fund was worth £150,000 at the Deceased's death. In August two years ago, the Deceased gave each of his two children £75,000. Other than making gifts to use his annual exemption on 6 April each year, he made no previous lifetime gifts. The executors are preparing to apply for the grant. At the relevant time the IHT nil rate band is £325,000, and the appropriate discount for jointly held land c

Yes. The Deceased's estate for IHT purposes is £480,000 which must be added to the value of specified transfers. This is less than £650,000 which is the amount of nil rate band available to the Deceased. To establish whether this is an excepted estate it is necessary calculate the gross value of the estate for IHT purposes (ie before deduction of debts, reliefs and exemptions). This estate comprises the investments, bank accounts and chattels, totalling £310,000, and the value of jointly owned property. The property was jointly owned with the sister, so a 15% discount is allowed; half of £400,000, discounted by 15%, is £170,000. The estate is therefore £310,000 plus £170,000 = £480,000. Adding the value of the specified transfers (the now chargeable PETs to the children of £75,000 each) gives a total of £630,000. The amount of nil rate band available to the Deceased is now increased to take account of transferred nil rate band of a predeceased spouse. The deceased's wife did have a full nil rate band, because even though she had not left everything to the Deceased, her legacies were to charities which are also exempt. Accordingly, the estate is a Category 1 "small estate" as the relevant value falls within the nil rate band (and all other requirements are satisfied) and so is excepted from the requirement to complete an IHT400.

You are the executor named in the will of an old schoolfriend who died three months ago. You have just obtained the grant of probate. Under the terms of the will the entire estate is left to charity. The estate comprises a life insurance policy (payable to the estate) with a maturity value of £10,000, shares worth £5,000 and a house which is valued at £300,000 which is subject to a mortgage in favour of the Southern Bank of £275,000. The only liabilities are a credit card debt of £10,000 and an unsecured loan from Redland Bank of £30,000. The cost of the funeral was £3,000. The testamentary expenses amount to £2,000. Explain how you should deal with the payment of the debts and expenses.

you will need to be able to apply the rules on the incidence of debts. As the estate passes to charity, there is no IHT to consider.There are insufficient assets in the estate to pay the debts and expenses. Thismeans that it is an insolvent estate. In paying the debts and expenses you, as theexecutor, must follow the statutory order set out in the Administration of InsolventEstates of Deceased Persons Order 1986.Secured debts are considered first. Where a debt is secured, the creditor can resortto their security for the payment of the debt. The mortgage on the house is a secureddebt. Southern Bank is entitled to be paid the £275,000 owed to it from the proceedsof sale of the house.The assets then available are the £25,000 remaining from the house after theBuilding Society has been paid, the life policy of £10,000 and the shares of £5,000. Atotal of £40,000 Funeral, testamentary and administration expenses are considered next. So, youmust pay the funeral expenses of £3,000 and the testamentary expenses of £2,000.This leaves £35,000.The next category of debts and expenses in the statutory order is ordinary debts.Both the credit card bill and the unsecured bank loan are within this category.Together they total £40,000 and the remaining assets total £35,000. The ordinarydebts will therefore abate equally (reduce proportionately) with the result that youmust pay the credit card provider £8,750* and the Redland Bank £26,250**