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Notes - Wills 1
Inheritance Tax
University of Law
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11/10/
Wills and Administration of Estates 1
Re: intestacy and an intestate estate (i. no will )
IHT 205 form IHT 400 PA1A - died totally intestate workshop
Is the will valid?
OUTCOME - Ascertain whether or not a will is valid - PREP TASK 1 Legal Foundations - Chapter 29 1. Formalities ● Check the will has been made according to the formalities under the Act ○ they must have complied with all the required Wills Act formalities in terms of getting the will properly executed etc ○ Usually, this will not be a problem, but it is important to note ○ Especially with more and more people making wills online etc.
2. Capacity A. 18+ B. Requisite mental capacity (i. sound mind)
● Currently, there is continuing uncertainty as to whether the case of Banks v Goodfellow or the Mental Capacity Act of 2005 governs capacity. ○ Banks v Goodfellow = current authority atm ○ Although current Law Commission proposal is to adopt the Mental Capacity Act ● Since Banks v Goodfellow governs the current position under this case there are 3 mian points to note. The testator must understand 1. The nature of their act 2. The extent of their property, and; 3. any moral claims that they ought to consider. - Also, the testator must not be suffering from any insane delusion ● Presumptions and proof ○ If there is no sign of mental confusion there is a presumption that capacity existed at the time of the will ○ If however, there is anything that casts doubt on that capacity then the PRs who would have to prove that the testator did have capacity ■ Burden of proof moves to PRs ■ But the person interested in inheriting would have to produce sufficient evidence to raise a doubt as to capacity ○ This is quite difficult to do after the death of the testator
● If a solicitor has any doubts as to the capacity of a testator, they should engage with a medical professional to ensure the person is of sound mind ○ And to ensure the solicitor has proof and evidence of this.
○ Otherwise this could amount to breaching the code of conduct or even negligence ● The solicitor should also make sure that the instructions of the testator are taken in the absence of anyone who might stand to benefit or who might have influence over the testator. So if a solicitor is drawing up a will for someone who’s elderly or seriously ill there are extra points to consider.
3. Intention ● Force / fear / fraud / undue influence ○ Look out for coercion ● Prove undue influence with regard to a will = v difficult to do if the testator is dead ○ The person interested in inheriting would have to prove that the testator was coerced or that the testator’s own judgement was overborn and he / she was coerced into making that will. ○ The person interested in inheriting would have to obtain evidence - which would be v difficult to do if the testator is dead. ○ However, there are rules that may assist. If the person wants to get access to GP and hospital records they may be able to do that. ○ And also if she needs information about the circumstances in which the will was prepared and executed, if a firm of solicitors acted they are required to give that information. ● Compare to life time gift ○ There can be presumption of undue influence in certain situations and those are where there is a relationship of trust and confidence and the transaction is one which requires explanation ○ There is a presumption of undue influence and transaction requires explaining, so the recipient would need to show that there was not undue influence
Notes Definitions ● Testator / testatrix = person that made the will ● Personal representative (PR) = the general term for a person who is administrating an estate, so for the person who’s looking after the estate of the person who has died. ○ Executor or executrix = someone appointed / named in a will by the testaor to administer the estate ○ Administrator = someone appointed where there has not been a will and the deceased was intestate.
● If an executor is a witness to a will it does not make the will invalid and it does not prevent the executor acting. ● A gift can be validly made to an executor in a will and the gift does not prevent the executor from acting.
Conflict of interest ● SRA code of conduct - principles 5 and 7
- If no valid will or partial intestacy, apply the intestacy rule a. under the intestacy rules, we have the spousal, civil partner and issue (i. descendants; so children and grandchildren etc) situation i. Now be quite careful when you’re looking at this in the textbook because there are various different scenarios. It could be that the deceased has just left a spouse and no issue. Or they could have just left issue but no spouse b. Now another requirement is that the person must have survived the deceased by more than 28 days c. Spouse receives the chattels, they also receive a statutory legacy of £270,000 and then they also receive half of what’s left. i. personal chattels defined under s55(1)(x) ii. look at the definition of chattels here that would basically mean that the clothing and the car d. what happens to the other half of the estate after the spouse gets it i. that remaining estate, according to the intestacy rules goes to the issue on the so-called statutory trusts ii. If one of the immediate children have died, their portion gets split between any children they have. iii. point to note here is that under the rules those under 18 have contingent interests, so they receive their money contingent upon reaching the age of 18 or marrying earlier. Anyone who is 18 would have a vested interest
Who is entitled to act in the administration of the estate? Valid will ● If the testator has left a valid will - the person named will be the executor / executrix of the will and administer the estate.
No valid will ● If the testator has not left a valid will - therefore did not appoint anybody to act as their executor, then we have to fall back on the statutory rules that tell us who is entitled to take on that role. -Non-Contentious Probate Rule 22 ● 22.— Order of priority for grant in case of intestacy ● (1) Where the deceased died on or after 1st January 1926, wholly intestate, the person or persons having a beneficial interest in the estate shall be entitled to a grant of administration in the following classes in order of priority, namely– ○ (a) the surviving [spouse or civil partner]; ○ (b) the children of the deceased and the issue of any deceased child who died before the deceased; ○ (c) the father and mother of the deceased; ○ (d) brothers and sisters of the whole blood and the issue of any deceased brother or sister of the whole blood who died before the deceased; ○ (e) brothers and sisters of the half blood and the issue of any deceased brother or sister of the half blood who died before the deceased; ○ (f) grandparents; ● You would go down the list if the first option didn't want to take on the role
● In some cases you need 2 administrators ○ because if you had administrators you have to have at least two where there are minority interests (e. if the children are under 18) ○ You only need two but you can have 3
Calculate IHT
OUTCOME - Calculate the inheritance tax consequences of a death. Legal Foundations - Chapter 4 WORKSHOP TASK 1. ● C
Notes ● Keep an eye out for spouse exemption and timing of payment of IHT ● documentcloud.adobe/gsuiteintegration/index.html?state=%7B%22ids% 2%3A%5B%221V0dcsZ2-2w_RyeI2J4LCm9ny1ULBkqyv%22%5D%2C%22action% 22%3A%22open%22%2C%22userId%22%3A%22105806646982637675842%22% C%22resourceKeys%22%3A%7B%7D%7D
Administration of an estate
OUTCOME - Undertake key steps in the administration of an estate Legal Foundations - Chapter 30 WORKSHOP TASK 2 Link to Checklist for administration of an estate
appropriate application form ● PA1A - if the person died totally intestate, i. no will at all. ○ it is a form to be filled in by the people applying for the grand. ○ So here, if Emma and Karen had decided to do that they would be the applicants for the form, and they have to set out things like the who the relatives were that Jeremy had when he died, so that the registry can see that Emma and Karen are the people who are entitled to be the PRs.
appropriate tax form ● IHT 205 - if it is an exempt accepted estate. ○ category 1 small estates ○ category 2 exempt estates ○ In the w/s Q, it is a Category 2 ‘exempt’ excepted estate because ■ gross value does not exceed £1 million; ■ lifetime gifts in past 7 years do not exceed £150,000 and ■ after deduction of spouse exemption, estate does not exceed IHT threshold ● IHT 400 - if it is not an accepted estate the correct tax form
If people aren't happy with how the deceased’s estate has been distributed? Inheritance (Provision for Family and Dependants) Act 1975 ● who can claim?
Notes - Wills 1
Module: Inheritance Tax
University: University of Law
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