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AF1 2018/19 > Wills/intestacy and power of attorney > Flashcards

Wills/intestacy and power of attorney Flashcards

1
Q

Who is involved in the creation of a will?

A

Will is a legal declaration by a testator, it will name one or more people to administer the estate. It sets out how the assets are distributed

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2
Q

What is the advantage of making a will

A

Tax efficiency
Control over destination of the assets
Uses trusted individuals ie executors

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3
Q

Can an executor be a beneficiary?

A

Yes

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4
Q

When putting a will in place, what five things are needed for it to be legitimate?

A 
In writing
Signed by the testator ( or by someone in their presence)
Full mental capacity
Not making it under duress
Two witnesses that must sign the will
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5
Q

What would happen if the beneficiary were to witness the will?

A

The will would be invalid and the beneficiary would not be able to inherit under the will.

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6
Q

A will is revoked by? (4 things)

A

Marriage or re-marriage ( unless the will has been made in contemplation of the marriage making specific reference to it)
Deliberate destruction - (testator must have full capacity)
Making of a later will - (there should be a statement that any previous wills will be revoked)
A declaration by testator that the will is revoked

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7
Q

At what point is a will revoked when there is a divorce?

A

When the divorce is finalised ie when the decree nisi comes through. An ex spouse is considered to have died from that day and will not inherit. However if the will stated that it would not be effected by divorce then the will still stands.

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8
Q

What are the duties of executors? (7)

A

Valuing the assets and the liabilities of the estate
Collecting in the assets and paying any debts( taxes/loans
Submitting accounts to HMRC (Form PA1)
Paying inheritance tax due
Obtaining probate
Distributing the estate in accordance with the will
Preparing estate accounts for the beneficiaries

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9
Q

At what point can the estate be distributed?

A

Once IHT has been paid, a grant of probate will be given by the Probate registry then the estate can be distributed

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10
Q

What happens where executors are unable or unwilling to act?

A

Administrators will be added by a court or by the probate registry and they will administer the will

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11
Q

What is a codicil?

A

Minor amendment to a will

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12
Q

Are mirror wills binding on each other?

A

No they are single wills

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13
Q

What is a mutual will?

A

Where a contractual agreement is made between 2 parties that can’t be revoked without the consent of the other person

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14
Q

What happens on the first death with a mutual will?

A

This then creates a binding contractual agreement so that the survivor cannot change their will

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15
Q

What is a codicil and what needs to be added to it to make the changes valid?

A

A codicil is a minor amendment to a will. It is signed by the testator and 2 witnesses and then added to the will. It will confirm the changes and that the rest of the will remains valid.

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16
Q

What is a statutory will?

A

If someone does not have mental capacity then this is where a will can be made on their behalf. You apply to court of protection for the will and then consult all those affected by the will. They will then grant approval and the will needs to be signed by the one making the will

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17
Q

Who would act if there was an invalid will or no will?

A

Personal representatives will act as administrators of the estate. Role is the same as the executors.

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18
Q

What happens when someone dies intestate?

A

Personal representatives act and apply to the probate registry for the issue of grant of letters of administration which means that they can distribute the assets.

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19
Q

What are the rules on intestacy for Spouse/C Partner and issue?

A

£250000 and chattels absolutely to the spouse

Residue: 50% to spouse, 50% children ( absolute trust until 18 or on earlier marriage

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20
Q

What are the rules on intestacy for spouse and no issue

A

Spouse receives all the estate

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21
Q

What are intestacy rules for no spouse?

A 
Everything to
a. children
b. if none, grandchildren
c, if none, parents,
d. if none, siblings
e. if none, grandparents
22
Q

What are intestacy with no relatives?

A

Estate goes to the crown

23
Q

What happens to joint assets on death?

A

These are not distributed on first death as they pass to the survivor regardless of will or intestacy

24
Q

What is a disclaimer?

A

Where a person due to inherit from an estate can decline accepting it. (Provided that they have not already accepted it).

25
Q

What are the rules around a disclaimer? (4)

A

It must be made in writing within 2 years of death
Person disclaiming must be 18 and sound mind
No reciprocation - the person disclaiming can not receive any compensation for what they give up
Deed needs to have the statement that it is to have an effect for IHT as though the disclaimed benefit has never been conferred.
The money returns back to the estate and the disclaimer can not decide where these assets are sent

26
Q

What is a deed of variation and its rules? (6)

A

Like a disclaimer but more flexible. All the beneficiaries that may benefit need to sign the deed. They need to be 18 and a sound mind
If it increases the IHT on the estate then it also needs to be signed by the personal representatives
It must be registered with HMRC within 6 months of creation
Must be executed within 2 years of death
If the DoV relatess to a will then it must refer to the will.

27
Q

What tax needs paying on death and by who?

A

Personal representatives must pay any outstanding income tax, CGT and National insurance.
Any income tax made after death must be paid at the basic rate but there is no personal allowance available

28
Q

Is CGT paid on death?

A

It is not paid where on any gains which have not been crystallised by the deceased.
However if the personal representatives need to sell any assets to pay any IHT then any chargeable gains will need to be declared and paid at either 20% or 28%. The estate will have the annual CGT exemption in that tax year and the two subsequent tax years. Base cost is on the date of death

29
Q

Is CGT paid when assets on death are passed to a beneficiary?

A

No, CGT would only be paid if the assets are sold after death not on transfer of the ownership

30
Q

Can any CGT losses be offset between PRs and the deceased?

A

Losses made by the personal representatives can only be offset by gains made by the PRs. They can not be offset with any gains made by the deceased.
If the deceased made any losses in the year of his death then these must firstly be offset with any gains in that tax year and then the previous 3 years.

31
Q

What is a power of attorney?

A

Someone legally appointed by another to act as their agent. The POA is the authority for the attorney to act.
The person giving this is the donor and the attorney id the donee

32
Q

What are the 2 things that you need to have to be a POA

A

Must be 18 and have legal capacity/sound mind

33
Q

What needs to happen when a POA is set up?

A

POA is given in the form of a deed
Must be signed by the donor
Have at least one independent witness
(if donor cannot sign then it must be signed on their behalf and have 2 witnesses minimum)

34
Q

when will a POA be revoked? (4)

A

On death, bankruptcy, decides to revoke or if a specific time limit has expired

35
Q

When would an Ordinary power of attorney be revoked?

A

If a donor becomes mentally incapacited

It cannot then be registered with the Office of the Public Guardian

36
Q

What were the duties of an enduring POA?(EPA)

A

Look after financial affairs and property

No new ones since October 1 2007

37
Q

What is the difference between ordinary and enduring POA?

A

Enduring can be used after a donor has lost mental capacity

38
Q

What needs to happen with the EPA once mental capacity has been lost?

A

The attorney must register with the Office of the Public Guardian when it believes the individual has lost capacity. Notice is then given to the individual /spouse/family who have 35 days to object to the registration

39
Q

What are the duties of the attorney? (6)

A

Act within the scope of the powers set out in the EPA
Act in the donor’s best interests
Ensure there is no conflict of interest
Not take advantage of their position
Observe confidentiality
Keep their own monies separate from that of the donor

40
Q

What does the EPA allow the attorney to d0 (5)

A 
Dispose of property
Deal with financial affairs
Sign documents
Make purchases on behalf of the individual
Make reasonable gifts
41
Q

What is classed as a reasonable gift that the attorney can make?

A

Seasonal gift or birthday gift. Gift to charity if that were reasonable and one that the donor would do
Gifts and transfers to trusts or for IHT purposes for example the attorney would have to apply for permission from the court

42
Q

Can an attorney make decisions about personal care and welfare?

A

No

43
Q

Under what circumstances can an EPA be revoked?

A

Donor must have mental capacity
If attorney dies or becomes incapable
On divorce or dissolution of civil partnership between donor and attorney

44
Q

What is the difference between an EPA and LPA?

A

EPa just covers financial and property affairs. LPA covers both financial and property and health and welfare
The EPA does not need to need to be registered with the court before it is used whilst the LPA does

45
Q

What is an advance decision in relation to an LPA?

A

A legally binding statement of their treatment wishes, setting out the treatment they would like if they lose capacity in the future

46
Q

What is the difference between the 2 LPAs in reference to mental capacity?

A

The property and financial LPA can be used whilst the donor still has mental capacity (provided it has been registered with the office of the Public Guardian) if the donor wishes. The health and welfare LPA can only be used when the donor has lost mental capacity.

47
Q

How do you complete a LPA? (7)

A

COmplete a specified form and with a payment this needs to be sent into the Office of the public guardian
It can only be in the donors sole name
It must be signed by donor and attorney
A prescribed person (ie solicitor) produces a certificate provider which shows the donor understands the LPA
It must be in writing via deed or section 10 short form.
It will name the attorney
Specify the power
Must be signed and witnessed

48
Q

What needs to be specified if joint attorneys are appointed?

A

That the decisions can either be joint or on a sole basis

49
Q

What needs to take place for the LPA to be valid? (3)

A

Mental capacity of the attorney
18 or over
Not bankrupt

50
Q

When can an LPA be revoked? (4)

A

If the donor has mental capacity
Attorney dies or becomes incapable
Divorce between attorney and donor
Either donor or attorney becomes bankrupt ( only applies to property LPA not the health and welfare one)

AF1 2018/19 (16 decks)

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