Legal Practice Course (LPC) Wills, Probate and Administration of Estates Syllabus

What does the commorientes rule (s.184 LPA 1925) provide?

Where two or more persons die in circumstances rendering it uncertain who survived whom, the deaths are presumed to have occurred in order of seniority - the younger is deemed to have survived the elder. (Note: for spouses on intestacy, s.46(3) AEA modifies this so neither inherits from the other.)

What is a 'grant of representation' and what are the three main types?

A court order authorising the personal representatives to administer the estate. The three main types are: (1) Grant of Probate (where there is a valid will appointing executors); (2) Grant of Letters of Administration with the Will Annexed (valid will but no proving executor); and (3) Grant of Letters of Administration (where there is no valid will - intestacy).

When is a grant of Letters of Administration (with Will Annexed) required rather than a grant of Probate?

Where there is a valid will but no executor able and willing to act - e.g. no executor was appointed, the appointed executor has predeceased, lacks capacity, or has renounced. An administrator is then appointed under the priority order in Rule 20 NCPR 1987.

State the order of priority for a grant of Probate / who may apply when there is a will (NCPR 1987 r.20).

Order: (1) executor; (2) trustee of the residuary estate; (3) any residuary beneficiary or someone entitled to share residue (including on partial intestacy); (4) PR of a deceased residuary beneficiary; (5) other legatees/devisees or creditors; (6) PRs of such persons.

State the order of priority to apply for Letters of Administration on intestacy (NCPR 1987 r.22).

Order mirrors the beneficial entitlement: (1) surviving spouse/civil partner; (2) children/issue; (3) parents; (4) brothers and sisters of whole blood; (5) half-blood siblings; (6) grandparents; (7) uncles/aunts of whole blood; (8) half-blood uncles/aunts; then the Crown, then creditors. A person must have a beneficial interest to apply.

What is the rule on the maximum and minimum number of administrators?

Maximum of four administrators may take a grant. A minimum of two administrators (or a trust corporation) is required where the will/intestacy creates a life interest or there is a minor beneficiary, to give a valid receipt for trust capital. Otherwise a sole administrator suffices.

Distinguish renunciation from having power reserved for an executor.

Renunciation: an appointed executor formally and permanently gives up the right to act (must not have intermeddled). Power reserved: where multiple executors are appointed, one or more may take the grant now while power is 'reserved' to the others to apply later, without renouncing.

What is 'intermeddling' and what is its effect on an executor's ability to renounce?

Intermeddling is doing acts of administration showing acceptance of office (e.g. collecting/disposing of assets, paying debts). An executor who has intermeddled cannot renounce and may be compelled to take the grant and account; acts of mere kindness or arranging the funeral are usually not intermeddling.

List the main supporting documents required for a grant application.

(1) The application (online or form PA1P for a will / PA1A for intestacy); (2) the original will and any codicils; (3) the relevant IHT account (IHT400, or the IHT205/excepted-estate information now reported via the probate application); (4) the probate court fee; and (5) the statement of truth (replacing the former oath).

What replaced the executor's oath, and what does the executor now confirm?

The 'statement of truth' replaced the sworn oath. The PR confirms the deceased's details, that the will is the last valid will, the basis of their entitlement to apply, and that they will administer the estate according to law and produce a full inventory and account if required.

What is a caveat in probate practice and how long does it last?

A caveat is a notice entered at the Probate Registry preventing a grant from being issued without notice to the caveator. It lasts six months and can be renewed. It is used to allow time to investigate the validity of a will or a competing claim to the grant.

What is a 'warning' to a caveat and an 'appearance'?

A person seeking a grant issues a 'warning' to the caveator, requiring them to state their interest. The caveator must enter an 'appearance' within 8 days if they have a contrary interest - this makes the caveat permanent until resolved by court. If no appearance is entered, the caveat can be removed.

What is a citation in contentious probate, and name two types.

A citation is a procedure compelling a person to take a step or lose their rights. Types: (1) citation to accept or refuse a grant (forcing a person with prior right to act or step aside); and (2) citation to propound a will (compelling someone alleging a will's validity to prove it in solemn form, or lose the right to set it up).

What is the difference between proving a will in 'common form' and 'solemn form'?

Common form: the standard non-contentious grant issued administratively without a hearing; it can be challenged later. Solemn form: probate granted by the court after a contested hearing on validity; it is final and binding on all parties given notice, save in limited circumstances (e.g. later-discovered will).

State the core duties of a personal representative on receiving the grant.

To: (1) collect and get in the deceased's real and personal estate; (2) administer it according to law - paying funeral, testamentary and administration expenses, debts and liabilities; and (3) distribute the residue to those entitled. PRs owe fiduciary duties and a statutory duty of care (Trustee Act 2000).

What is the duty of care under s.1 Trustee Act 2000 and when does it apply?

PRs/trustees must exercise such care and skill as is reasonable in the circumstances, having regard to any special knowledge or experience they have or hold themselves out as having (a higher standard for professionals). It applies to functions such as investment, delegation, insurance and acquiring land.

What is the PRs' authority to act before and after the grant?

An executor's authority derives from the will and exists from the moment of death (the grant merely confirms it). An administrator's authority derives only from the grant and they have no power to act before it is issued (except to preserve the estate and arrange the funeral).

What is the limited statutory power of PRs to appropriate assets?

Under s.41 AEA 1925, PRs may appropriate any part of the estate in or towards satisfaction of a legacy or beneficial interest, provided it does not prejudice a specific beneficiary. The consent of the beneficiary receiving the appropriated asset is generally required.

How should PRs value the estate's assets for probate and IHT?

Assets are valued at their open-market value at the date of death (the price they would fetch if sold on the open market). Jointly owned property may attract a discount. Quoted shares are valued using the quarter-up rule; the PRs should obtain professional valuations for land and significant assets.

What is the 'quarter-up' rule for valuing quoted shares?

Quoted shares are valued at the lower closing price plus one quarter of the difference between the lower and higher closing prices. If $L$ is the lower and $H$ the higher quoted price, the value is $L + \frac{1}{4}(H - L)$.

State the statutory order in which assets are applied to pay debts of a SOLVENT estate (s.34 / Sch.1 Pt II AEA 1925).

Order: (1) property undisposed of by will (subject to retaining a pecuniary legacy fund); (2) residue; (3) property set aside to meet pecuniary legacies; (4) property specifically given for payment of debts; (5) property charged with debts; (6) the pecuniary legacy fund; (7) property specifically devised/bequeathed (rateably); (8) property over which the deceased had a general power of appointment.

How are debts paid in an INSOLVENT estate, and what is the order?

In an insolvent estate the rules mirror bankruptcy. Order: (1) secured creditors (out of their security); (2) funeral, testamentary and administration expenses; (3) preferred debts; (4) ordinary unsecured debts; (5) interest on preferred and ordinary debts; (6) deferred debts. Creditors within a class rank equally and abate pro rata.

What is the difference between a secured and an unsecured debt in administration, and the default rule under s.35 AEA?

A secured debt is charged on specific property (e.g. a mortgage); an unsecured debt is not. Under s.35 AEA 1925, a beneficiary taking a property subject to a charge takes it subject to that secured debt (the charge is primarily payable out of that property) unless the will shows a contrary intention.

What are 'estate accounts' and what do they typically comprise?

The final accounts the PRs prepare showing the administration. They typically include: a capital account (assets and their realisation, less debts, expenses and legacies); an income account (income received during administration and how applied); and a distribution account showing the residue and how it is divided among residuary beneficiaries. Beneficiaries usually sign to approve them.

What protection does a s.27 Trustee Act 1925 notice give personal representatives?

By advertising for claimants (in the London Gazette, a local newspaper, and as appropriate) and waiting the statutory minimum of two months, PRs are protected from personal liability to unknown creditors and beneficiaries who do not come forward. The claimant may still pursue the assets in the hands of beneficiaries.

What is a Benjamin order and when is it sought?

A court order (from Re Benjamin) permitting PRs to distribute the estate on a stated assumption - typically that a missing beneficiary has predeceased - where their existence or whereabouts cannot be ascertained after full enquiries. It protects the PRs from personal liability if the assumption proves wrong; the true beneficiary may still trace the assets.

What alternatives to a Benjamin order may protect PRs against a missing or uncertain claimant?

(1) Missing beneficiary indemnity insurance; (2) taking a personal indemnity from the beneficiaries; (3) setting aside a reserve fund; or (4) paying funds into court. These can be cheaper/quicker than a Benjamin order but each gives different levels of protection.

What is the current nil rate band (NRB) for inheritance tax and how is the death estate taxed above it?

The NRB is £325,000. The chargeable death estate above the available NRB is taxed at 40% (or 36% where at least 10% of the net estate is left to charity). The NRB has been frozen and applies after deducting exemptions and reliefs.

Explain the transferable nil rate band between spouses/civil partners.

On the death of the second spouse/civil partner, the unused proportion of the first deceased spouse's NRB may be transferred and added to the survivor's NRB. The transfer is by percentage of NRB unused, so the maximum combined NRB on the second death is up to $2 \times £325{,}000 = £650{,}000$. A claim must be made by the PRs.

Explain the residence nil rate band (RNRB), its amount and key conditions.

The RNRB is currently £175,000 of additional NRB available where a 'qualifying residential interest' is 'closely inherited' by lineal descendants (children, grandchildren etc., including step/adopted/foster). Like the NRB it is transferable between spouses, giving a combined potential of up to £350,000 across a couple.

How does the RNRB taper for larger estates?

The RNRB is reduced by £1 for every £2 by which the net estate exceeds the £2,000,000 taper threshold. So the taper reduction is $\frac{\text{net estate} - £2{,}000{,}000}{2}$, and the RNRB is fully withdrawn once the estate is large enough to extinguish it.

Name the main IHT exemptions on death and lifetime transfers.

(1) Spouse/civil partner exemption (unlimited, if recipient UK domiciled); (2) charity exemption; (3) gifts to qualifying political parties; (4) annual exemption (£3,000 per year, lifetime); (5) small gifts (£250 per person); (6) normal expenditure out of income; and (7) marriage/civil partnership gifts (£5,000 parent / £2,500 grandparent / £1,000 other).

Explain Business Property Relief (BPR) and the principal rates.

BPR reduces the value of qualifying business property for IHT. 100% relief applies to a business or interest in a business and unquoted/unlisted company shares; 50% relief applies to quoted controlling shareholdings and certain assets used in the business. The property must generally have been owned for at least two years and not be an 'excepted' (mainly investment) business.

Explain Agricultural Property Relief (APR), its rates and ownership conditions.

APR reduces the agricultural value of qualifying agricultural property. 100% relief applies where the transferor had vacant possession or the right to obtain it within 12 months (and for most let land); 50% applies to certain older lettings. Ownership conditions: occupied by the owner for 2 years, or owned for 7 years if occupied by another for agriculture.

What is a potentially exempt transfer (PET) and when does it become chargeable?

A PET is a lifetime gift by an individual to another individual (or certain trusts) that is exempt when made but becomes chargeable if the transferor dies within 7 years. If the transferor survives 7 years it is wholly exempt. If they die within 7 years, it becomes a chargeable transfer assessed using the death rates.

What is a chargeable lifetime transfer (CLT) and how is it taxed at the time of the gift?

A CLT is a lifetime transfer that is immediately chargeable, typically a gift into a relevant property trust. It is charged at the lifetime rate of 20% on value above the available NRB at the time (the 'lifetime' or half-death rate). Further tax at death rates may be due if the transferor dies within 7 years.

Explain the cumulation principle for lifetime transfers.

To find the NRB available for any transfer, you cumulate the chargeable transfers made in the previous 7 years. Each new transfer uses up NRB after deducting earlier cumulative transfers. On death, all chargeable transfers in the 7 years before death are cumulated and reduce the NRB available against the death estate.

How does taper relief operate on a failed PET or CLT, and is it relief on tax or value?

Taper relief reduces the IHT payable (not the value) on a chargeable lifetime transfer where the transferor dies between 3 and 7 years after the gift. Reductions: 3-4 yrs 20%, 4-5 yrs 40%, 5-6 yrs 60%, 6-7 yrs 80%. It only reduces tax actually due, and only where the transfer's value exceeds the NRB.

What is a post-death variation under s.142 IHTA 1984 and its key conditions?

A beneficiary may redirect their inheritance to another person, and if the variation states it is to take effect for IHT (and CGT s.62 TCGA) purposes, it is 'read back' as if made by the deceased. Conditions: in writing, signed by the original beneficiary, made within 2 years of death, contain the relevant statements, and not be for consideration outside the estate.

What is the difference between a disclaimer and a variation?

A disclaimer is a refusal to accept a gift - the beneficiary cannot choose where it goes; it passes as if the gift had failed (to residue or under intestacy). A variation lets the beneficiary actively redirect the property to a chosen person. A disclaimer cannot be made if the benefit has already been accepted.

Who may bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975?

(1) The spouse/civil partner; (2) a former spouse/civil partner who has not remarried; (3) a person cohabiting as spouse for 2 years before death; (4) a child of the deceased; (5) a person treated as a child of the family; and (6) any person being maintained (wholly or partly) by the deceased immediately before death.

What are the two standards of 'reasonable financial provision' under the 1975 Act?

(1) The surviving spouse/civil partner standard: such provision as is reasonable in all the circumstances, whether or not required for maintenance (the higher standard). (2) The ordinary standard (all other applicants): such provision as is reasonable for the applicant's maintenance only.

What is the time limit for bringing a claim under the 1975 Act and is it extendable?

A claim must generally be brought within 6 months of the date of the grant of representation. The court has discretion to extend the time limit, but extension is not guaranteed and is exercised cautiously. This is why PRs are advised to wait beyond 6 months before distributing where a claim is possible.