Summary IHT, Wills and Administration of Estates Notes - Distinction 90%
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Course
Introduction to Professional Practice (IPP)
Institution
University Of Law (ULaw)
LPC IHT, Wills + Administration of Estates Notes (ULaw)
90% achieved in exam!
Contains: (67 pages)
Notes covering all topics in IHT workshop, and Wills workshop 1 and workshop 2, and
Multiple Choice Questions (MC...
Contents
WILLS + ADMINISTRATION OF ESTATES .............................................................................................................................................................................................. 2
Succession To Property On Death – Background Law ................................................................................................................................................................... 2
What Property Can Pass Under A Will And The Intestacy Rules.............................................................................................................................................. 2
Requirements For A Valid Will....................................................................................................................................................................................................... 3
Formalities For Execution .............................................................................................................................................................................................................. 4
Revocation ..................................................................................................................................................................................................................................... 6
What Property Passes Under Gifts In The Will? ............................................................................................................................................................................ 7
Has The Beneficiary Survived The Testator? ............................................................................................................................................................................ 7
Gifts Failing For Any Other Reason .......................................................................................................................................................................................... 8
Identifying The Beneficiaries .................................................................................................................................................................................................... 8
THE INTESTACY RULES ......................................................................................................................................................................................................................... 9
The Inheritance (Provision For Family And Dependants) Act 1975............................................................................................................................................. 10
INTESTACY STEPS ......................................................................................................................................................................................................................... 12
PROBATE PRACTICE AND PROCEDURE.............................................................................................................................................................................................. 14
Who Are The PR’s?....................................................................................................................................................................................................................... 14
First Steps After Receiving Instructions ....................................................................................................................................................................................... 14
Deciding Whether A Grant Of Representation Is Necessary ....................................................................................................................................................... 15
Applying For A Grant.................................................................................................................................................................................................................... 16
Completing The IHT Account ....................................................................................................................................................................................................... 17
Funding The Inheritance Tax .................................................................................................................................................................................................. 18
Forms PA1P And PA1A ........................................................................................................................................................................................................... 21
Effect Of Grant ............................................................................................................................................................................................................................. 24
ADMINISTRATION OF AN ESTATE ..................................................................................................................................................................................................... 26
Administrative Powers ................................................................................................................................................................................................................ 26
Provisions Concerning The Administration Of The Estate ..................................................................................................................................................... 27
Provisions Concerning The Administration Of A Trust........................................................................................................................................................... 27
Collecting The Deceased’s Assets ................................................................................................................................................................................................ 29
Paying The Deceased’s Funeral And Testamentary Expenses And Debts ................................................................................................................................... 29
Administration Of Assets – Solvent Estate............................................................................................................................................................................. 30
Administration Of Assets – Insolvent Estate .......................................................................................................................................................................... 31
Completing The Administration And Distributing The Residuary Estate .................................................................................................................................... 32
INHERITANCE TAX (IHT) SUMMARY .................................................................................................................................................................................................. 33
Template For Iht Calculations ...................................................................................................................................................................................................... 35
Step 1: Identify The Transfer Of Value ........................................................................................................................................................................................ 38
Step 2: Find The Value Transferred ............................................................................................................................................................................................. 39
Step 3: Apply Any Relevant Exemptions And Reliefs .................................................................................................................................................................. 40
Step 4: Calculate Tax At The Appropriate Rate ........................................................................................................................................................................... 40
Lifetime Gifts Made To Individuals Within 7 Years Prior To Death ............................................................................................................................................. 41
Effect Of Death On Lifetime Transfers ................................................................................................................................................................................... 42
Liability + Burden Of Payment ..................................................................................................................................................................................................... 43
WILLS + ADMINISTRATION OF ESTATES MCQ’S ................................................................................................................................................................................ 46
Inheritance Tax ............................................................................................................................................................................................................................ 46
Instalment Option ........................................................................................................................................................................................................................ 51
Cgt + Income Tax .......................................................................................................................................................................................................................... 53
Intestacy....................................................................................................................................................................................................................................... 55
Wills ............................................................................................................................................................................................................................................. 58
Administration Of An Estate: (Administration/Probate/Executors/Claims) .............................................................................................................................. 64
, WILLS + ADMINISTRATION OF ESTATES
SUCCESSION TO PROPERTY ON DEATH – BACKGROUND LAW Order to deal with property:
When a person dies, one of the most important questions is who will 1. Property passing independently of
inherit that person’s property. The first thing to ask is whether or not the will and intestacy rules;
there is a will. 2. Property passing by will;
3. Property undisposed of by will and
therefore passing under the
What property can pass under a will and the Intestacy Rules: intestacy rules.
A will can operate to dispose of most types of property which an
individual may own upon death.
If an individual doesn’t dispose of property by a will, it passes on death according to the intestacy rules.
Which property passes independently of the will and intestacy rules:
Joint property – where property is held by more than one person as joint tenants in equity, on the death of one, his
interest passes by survivorship to the surviving joint tenant.
Nominated property – statutory provisions allowing individuals to ‘nominate’ what happens to some types of funds
apply to deposits not exceeding £5,000 in certain trustee savings banks, friendly societies, and industrial and
provident societies.
▪ A nomination is a direction to the institution to pay the money in the account, on the death of the investor,
to a chosen/nominated 3rd party.
Insurance policies – a simple life assurance policy belongs to the individual. On his death the policy matures, and the
insurance company will pay the proceeds to his representatives, who will distribute it according to the terms of a will
or the intestacy rules.
▪ However, the policy can be taken out and expressed to be for the benefit of specified individuals – this is
effectively a gift on trust for those individuals. This can be done in 2 ways:
1) Married Women’s Property Act 1882, s.11 – a person taking out a life assurance policy may express
it to be for the benefit of their spouse or children.
2) A policy may be expressly written in trust for or assigned to named beneficiaries.
Pension benefits – commonly, a lump sum calculated on the basis of employees’ salaries at the time of their death is
paid by the trustees of the pension fund to members of the family or dependants chosen.
,REQUIREMENTS FOR A VALID WILL:
For a valid will, the testator must have the necessary capacity and intention, and observe the formalities set out in
the Wills Act 1837.
Capacity:
An individual must be aged over 18 and must have the requisite mental capacity.
Testamentary capacity was defined in Banks v Goodfellow (1870) as ‘soundness of mind, memory and
understanding.’ The testator must understand:
a) The nature of his act and its broad effects;
b) The extent of his property (though not necessarily recollecting every individual item);
c) The moral claims he ought to consider (even if he decides to reject such claims).
In addition, the testator must not be suffering from any insane delusion which affects the disposition of property.
Proof and Presumptions:
▪ At common law, the person who puts forward a will has to prove that all necessary elements, including
mental capacity, are present.
- Usually, this is not burdensome – however, if there is anything to put the testator’s capacity in
doubt, the presumption will not apply, and the personal representatives (PR’s) will have to prove on
the basis of the Banks v Goodfellow test.
▪ The Mental Capacity Act 2005 (MCA) came into force on 1 April 2007 – introduced the statutory test to
determine capacity.
- S.1(2) – ‘for the purposes of this act, a person must be assumed to have capacity unless it is
established that he lacks capacity.’
▪ Scammell v Farmer [2008] – the judge concluded that the MCA applies only to decisions
taken under the Act by the Court of Protection on behalf of another, so it ought not to apply
to a person’s capacity to make their own will.
▪ Kicks v Leigh [2014] – review of cases determined that Scammell had good analysis.
▪ Walker v Badmin [2014] – review of cases determined that Banks v Goodfellow test for
capacity applied rather than the MCA 2005 test.
▪ James v James [2018] – agreed with Walker.
Intention:
When the will is signed, the testator must have both general and specific intention. So they must intend to make a
will and must also intend to make the particular will not being executed.
The burden of proving the testators knowledge and approval falls on the person putting forward the will.
Presumption – a testator who has capacity and has then read and executed the will is presumed to have the
requisite knowledge and approval. However, this presumption doesn’t apply in the following situations.
, Conduct point – those regulated by the SRA are required to act with honesty and integrity and in the best interests
of clients (principles 4, 5 and 7). They must not abuse their position by taking unfair advantage of clients, and they
must not act if there is a significant risk that the duty to act in the best interests of the client conflicts with their own
interests.
a) It is therefore sensible for firms to have a policy of refusing to act where a client proposes to make a gift of
significant value to a fee earner or member of their family unless the client takes independent legal advice.
Force, fear, fraud and undue influence – where a testator with capacity appears to have known and approved the
contents of the will, any person who wishes to challenge it must prove one or more of the following:
▪ Force, fear, fraud or undue influence – a will is invalid if it is shown that the testator made all or part of the
will as a result of force or fear (actual or threatened injury), or fraud (being misled), or undue influence
(freedom of choice overcome by intolerable pressure).
o In relation to a will, it is necessary to prove undue influence. (Makes it more difficult)
▪ Unlike with a lifetime gift – where a lifetime gift requires explanation to a person who is in a
position of trust and confidence, there is a presumption of undue influence.
▪ Mistake – any words included without the knowledge and approval of the testator will be omitted from
probate.
o Actual mistake – absence of knowledge and approval.
o Misunderstanding as to true meaning of legal words – won’t be omitted but may be interpreted in a
way to give effect to the testators intentions.
FORMALITIES FOR EXECUTION:
s.9 Wills Act 1837:
No will shall be valid unless:
a) It is in writing, and signed by the testator, or by some other person in his presence and by his
direction; and
b) It appears that the testator intended by his signature to give effect to the will; and
c) The signature is made or acknowledged by the testator in the presence of 2 or more witnesses
present at the same time; and
d) Each witness either:
i) Attests and signs the will; or
ii) Acknowledges the signatures,
In the presence of the testator (but not necessarily in presence of other witness),
But no form of attestation shall be necessary.
There is one exception – a will made on actual military service or by a mariner or seaman at sea is valid and may be
in any form, including a mere oral statement (s.11).
Remote Witnessing:
The Wills Act 1837 (Electronic Communications)(Amendment)(coronavirus) Order 2020 (SI 2020/952) – Article 2
amends the Wills Act 1837 as follows:
▪ The existing s.9 becomes s.9(1), and a new s.9(2) provides:
o ‘For the purposes of paragraphs (c) and (d) of subsection (1), in relation to wills made on or after 31
January 2020 and on or before 31 January 2022, ‘presence’ includes presence by means of
videoconference or other visual transmission.’
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