Administration - post-grant

What common-law duty do PRs have before issue of the grant?

To dispose of the deceased’s body: Williams v Williams. Pasted text

What statutory IHT duties do PRs have before the grant?

Provide estate information to HMRC under s 216 IHTA and pay IHT under s 226 IHTA.

What is the core duty under s 25(a) AEA 1925?

Collect and get in the deceased’s real and personal estate and administer it according to law.

What does the PRs’ duty to “collect in” involve?

Identifying assets, liabilities and creditors, and obtaining control or legal ownership of assets.

What does the PRs’ duty to “administer” involve?

Securing assets, paying debts/liabilities and legacies, and distributing residue.

What duty do PRs have under s 25(b) AEA 1925?

Provide an inventory and account of estate assets.

What is an estate inventory?

A list of estate assets and their values.

What is an estate account?

A record of the steps taken during administration.

Who may request to see estate accounts?

Beneficiaries and creditors.

What can beneficiaries or creditors do if PRs refuse access to estate accounts?

Apply for a court order.

What duty of care applies to PRs under s 35 TA 2000?

The trustee duty of care under s 1 TA 2000.

When does the statutory duty of care particularly apply to PRs?

When investing, delegating, insuring and purchasing land.

When is a higher duty of care expected of a PR?

Where they are a professional or have/claim special knowledge or experience.

What general duty of diligence do PRs owe?

Due diligence appropriate to the facts.

Within what period should an estate normally be administered?

Within 12 months of death under s 44 AEA; delay beyond this must be justified.

What fiduciary no-conflict duty applies to PRs?

They must not place themselves in a conflict of interest.

Give an example of a PR conflict of interest.

Purchasing an asset from the estate.

What fiduciary no-profit duty applies to PRs?

They must not make unauthorised profits from their position.

When can payment for PR services avoid breaching the no-profit rule?

Where acting professionally or payment is authorised by the will.

How long does a PR’s appointment last?

For life.

What happens if new assets, creditors or beneficiaries emerge after administration?

The PRs remain duty-bound to deal with them.

What is the consequence of a PR acting outside their powers?

The act is ultra vires and amounts to breach of duty.

Must PRs usually exercise discretionary powers unanimously?

Yes.

What exception applies to unanimity of PR decision-making?

Exercise of a lawful power to sell or transfer an estate asset.

What powers apply where the deceased died intestate?

Statutory powers only.

What powers apply where the deceased left a will?

Statutory powers unless inconsistent with express provisions in the will.

What power do PRs have under ss 33 and 39 AEA?

Power to sell, charge or lease estate property.

Why might PRs sell, charge or lease estate assets?

E.g. to pay debts or IHT.

What is appropriation under s 41 AEA?

Transfer of an estate asset in or towards satisfaction of a beneficiary’s entitlement.

What consent is normally needed for appropriation?

The recipient beneficiary’s consent.

When is beneficiary consent to appropriation unnecessary?

Where the will expressly removes the requirement.

What restriction applies to appropriation regarding other beneficiaries?

It must not prejudice another beneficiary.

Give an example of prejudice preventing appropriation.

Appropriating an asset specifically gifted to someone else.

At what date is an appropriated asset valued?

The date of appropriation, not the date of death.

What happens if an appropriated asset is worth less than the beneficiary’s entitlement?

The shortfall must be made up.

Can PRs appropriate an asset worth more than the beneficiary’s entitlement?

No.

What can PRs do if a beneficiary wants an asset worth more than their entitlement?

Sell it to them instead.

Can a PR who is also a beneficiary appropriate assets to themselves?

Yes, subject to the self-dealing rules.

When may a beneficiary-PR appropriate an asset to themselves without breaching self-dealing?

Where it is a cash-equivalent asset, e.g. quoted shares.

When would appropriation to a beneficiary-PR breach self-dealing?

Where the asset is non-cash, e.g. unquoted shares, unless authorised.

How can a beneficiary-PR validly appropriate a non-cash asset to themselves?

With authorisation from the other beneficiaries or the court.

What special appropriation rule applies to an intestate family home?

A surviving spouse may have the deceased’s interest appropriated towards their intestacy entitlement.

Can a spouse who is also a PR appropriate the family home to themselves?

Yes, provided they are not the sole administrator.

What statutory power allows PRs to insure estate assets?

s 19 TA 1925.

From what funds can insurance premiums be paid?

Estate income or capital.

What statutory power allows PRs to invest?

s 3 TA 2000.

Why may PRs need to invest estate assets?

To preserve the estate where assets are retained for a longer period.

Can PRs acquire land as an investment?

Yes, under s 8 TA 2000.

What ongoing duty applies to PR investments?

Regular review.

What criteria must PRs consider when investing?

The standard investment criteria in s 4 TA 2000.

Must PRs obtain investment advice?

Yes, unless reasonably unnecessary or inappropriate under s 5 TA 2000.

When can professional PRs receive reasonable remuneration under s 29 TA 2000?

If not acting alone and their co-PRs consent in writing.

When may a lay PR charge for services?

Only where the will expressly authorises it.

When may a professional PR acting alone charge for services?

Only where the will expressly authorises it.

Is remuneration for PR services treated as a gift?

No, under s 28 TA 2000 / s 15 WA 1837.

Can all PRs reimburse themselves for proper expenses?

Yes.

Can a PR charge for their time lost from other work as an expense?

No.

What power allows PRs to delegate to an agent?

s 11 TA 2000.

What distribution decision cannot PRs delegate?

How and whether estate assets should be distributed.

What accounting decision cannot PRs delegate?

Whether fees/costs are payable from income or capital.

What appointment powers cannot PRs delegate?

Appointment of trustees, nominees or custodians.

Can PRs delegate powers to a beneficiary?

No.

Can PRs delegate powers to another PR?

Yes.

What formalities apply when delegating to an agent?

Delegation in writing plus a written policy statement agreed by the agent.

What must PRs do after delegating to an agent?

Keep the agent’s use and policy terms under review.

Why must PRs usually hold assets on trust for a minor?

A minor cannot give a valid receipt.

What powers may PRs use while holding assets for a minor?

Investment, maintenance and advancement powers.

Can a parent or guardian give a valid receipt for a minor?

Yes, unless the will provides otherwise.

Can a will require a legacy to be held by trustees for a minor?

Yes.

Can a will allow PRs to accept a receipt from a beneficiary aged 16 or over?

Yes.

What alternative to PRs retaining assets for a minor is available under s 42 AEA?

Appoint other trustees to hold them.

What should PRs check if the deceased was a shareholder in a business?

The articles and any shareholders’ agreement.

What should PRs check if the deceased was a partner?

The partnership agreement.

What power do PRs have where the deceased was a sole trader?

Common-law power to sell the business as a going concern within 1 year of death.

What limitation applies when PRs continue a sole-trader business?

They may only use business assets existing at death.

Are PRs personally liable to business creditors when continuing a sole-trader business?

Yes.

Can PRs indemnify themselves from the estate for liabilities incurred running the business for realisation?

Yes.

Can a will expand PR powers beyond statute?

Yes.

Can a will exclude or modify statutory PR powers?

Yes.

Which provisions take priority: statutory or express will provisions?

Express will provisions.

What standard provisions are often incorporated into wills for PR powers?

STEP provisions.

When are PRs personally liable for loss?

Where caused by their own breach of duty.

Can a PR be liable for another PR’s breach?

Yes, if they failed to make reasonable efforts to monitor that PR’s conduct.

How can a PR be removed under s 50 AJA 1985?

By court order appointing a replacement.

What is an administration action?

Proceedings in which the court takes over administration of the estate.

To whom do PRs owe duties according to Tankard v Midland Bank?

Estate beneficiaries and creditors.

What is devastavit?

Wasting of estate assets through PR breach or wrongdoing.

What remedy may follow devastavit causing loss to the estate?

PR may be ordered personally to make good the loss.

What remedies may follow breach of fiduciary duty without loss?

Account of unauthorised profit and/or setting aside the transaction.

Give an example of maladministration by a PR.

Distribution to the wrong or insolvent beneficiary.

Give another example of maladministration.

Using residue to meet liabilities that should fall on another part of the estate.

Give another example of maladministration involving creditors.

Paying legacies before debts without retaining enough for creditors.

What is an example of misuse of estate assets?

Personal use of estate property by a PR.

What delay can amount to PR negligence?

Unreasonable delay in administration.

What investment conduct can amount to negligence?

Failing to invest or making poor investment decisions.

What fiduciary breaches may give rise to PR liability?

Breach of no-conflict, no-profit or self-dealing rules.

How can PRs protect themselves where a will is ambiguous?

Seek court directions.

What are the two forms of court assistance identified in the notes?

Administration action or specific relief on a particular issue.

What is a s 48 AJA 1985 application used for?

To distribute in accordance with a written legal opinion where a provision is ambiguous.

Why should PRs conduct bankruptcy searches against beneficiaries?

A bankrupt beneficiary’s estate interest may vest in their trustee in bankruptcy.