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Questions and Answers
The personal representatives sold the shares for ______.
The personal representatives sold the shares for ______.
£225,000
The painting was transferred to the beneficiary when its value had risen to ______.
The painting was transferred to the beneficiary when its value had risen to ______.
£510,000
The Capital Gains Tax rate during this period was ______%.
The Capital Gains Tax rate during this period was ______%.
20
The annual exemption for Capital Gains Tax was ______.
The annual exemption for Capital Gains Tax was ______.
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After deducting the annual exemption, the taxable gain is ______.
After deducting the annual exemption, the taxable gain is ______.
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In the case of an insolvent estate, the order of distribution should follow the Administration of Insolvent Estates of Deceased Persons Order _____ (SI 1986/1999).
In the case of an insolvent estate, the order of distribution should follow the Administration of Insolvent Estates of Deceased Persons Order _____ (SI 1986/1999).
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Secured creditors may realize the security, meaning they can sell the property by exercising a power of _____ as mortgagee or chargee.
Secured creditors may realize the security, meaning they can sell the property by exercising a power of _____ as mortgagee or chargee.
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Funeral and testamentary expenses are paid in _____ to ordinary unsecured debts and liabilities.
Funeral and testamentary expenses are paid in _____ to ordinary unsecured debts and liabilities.
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In an insolvent estate, unsecured debts will abate equally due to insufficient _____ to pay all debts.
In an insolvent estate, unsecured debts will abate equally due to insufficient _____ to pay all debts.
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Rashid's estate includes £10,000 in a bank account and personal effects worth £_____.
Rashid's estate includes £10,000 in a bank account and personal effects worth £_____.
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Rashid had a credit card debt of £_____, which is an unsecured debt.
Rashid had a credit card debt of £_____, which is an unsecured debt.
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The mortgage on Rashid's house is a _____ debt and is paid first from the proceeds of the house sale.
The mortgage on Rashid's house is a _____ debt and is paid first from the proceeds of the house sale.
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After paying the Building Society, the total assets available to the PRs amount to £_____ before other expenses.
After paying the Building Society, the total assets available to the PRs amount to £_____ before other expenses.
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The beneficiary acquires the asset at ______ at the date of death.
The beneficiary acquires the asset at ______ at the date of death.
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For each income tax year during the administration period, the PRs must calculate their income tax and any ______ liability on assets disposed of.
For each income tax year during the administration period, the PRs must calculate their income tax and any ______ liability on assets disposed of.
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Provided the estate is not classified as a complex estate, they can make an informal ______ without having to provide a tax return.
Provided the estate is not classified as a complex estate, they can make an informal ______ without having to provide a tax return.
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An estate is considered complex if the value of the estate exceeds ______.
An estate is considered complex if the value of the estate exceeds ______.
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CGT on the disposal of UK residential land must be paid within ______ days of completion.
CGT on the disposal of UK residential land must be paid within ______ days of completion.
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Once the outstanding tax, legal costs and other matters have been disposed of, PRs should consider transferring any remaining assets to the ______ beneficiaries.
Once the outstanding tax, legal costs and other matters have been disposed of, PRs should consider transferring any remaining assets to the ______ beneficiaries.
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If the beneficiaries are adults and have a vested entitlement to property in the residuary estate, their ______ can be transferred to them.
If the beneficiaries are adults and have a vested entitlement to property in the residuary estate, their ______ can be transferred to them.
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If any beneficiaries are under 18 years of age, the property will usually be held in ______ for them until the age of majority is reached.
If any beneficiaries are under 18 years of age, the property will usually be held in ______ for them until the age of majority is reached.
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The 'administration period' commences at the moment immediately following the ______.
The 'administration period' commences at the moment immediately following the ______.
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The primary duty of the PRs is to 'collect and get in the real and personal ______ of the deceased.'
The primary duty of the PRs is to 'collect and get in the real and personal ______ of the deceased.'
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A PR who breaches their duty may be personally liable for loss to the ______.
A PR who breaches their duty may be personally liable for loss to the ______.
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A breach of duty by a PR is known as ______.
A breach of duty by a PR is known as ______.
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Section 61 of the Trustee Act 1925 allows the court to relieve a PR from ______ for a breach of duty.
Section 61 of the Trustee Act 1925 allows the court to relieve a PR from ______ for a breach of duty.
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If further assets or liabilities are discovered after the residue has been ______, PRs must still deal with them.
If further assets or liabilities are discovered after the residue has been ______, PRs must still deal with them.
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PRs must pay funeral and testamentary expenses and ______.
PRs must pay funeral and testamentary expenses and ______.
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Completing the administration involves distributing the ______ estate.
Completing the administration involves distributing the ______ estate.
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The gross income was £4,000, and after interest paid of £1,000, the taxable income became £______.
The gross income was £4,000, and after interest paid of £1,000, the taxable income became £______.
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Income tax payable is 20% of the taxable income, which amounts to £______.
Income tax payable is 20% of the taxable income, which amounts to £______.
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After settling the tax position, the net income paid to the beneficiary is £______.
After settling the tax position, the net income paid to the beneficiary is £______.
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Capital gains tax (CGT) is charged on the gains made on the disposal of a ______ asset.
Capital gains tax (CGT) is charged on the gains made on the disposal of a ______ asset.
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CGT is assessed based on the difference between the purchase price and the sale price, or ______ value if given away.
CGT is assessed based on the difference between the purchase price and the sale price, or ______ value if given away.
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For the tax year 2024/25, there is an exemption for the first £______ of gains made by an individual.
For the tax year 2024/25, there is an exemption for the first £______ of gains made by an individual.
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On death, there is no ______ for CGT purposes, meaning no liability to CGT arises.
On death, there is no ______ for CGT purposes, meaning no liability to CGT arises.
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The probate value acquired by the PRs becomes the base cost for future ______ purposes.
The probate value acquired by the PRs becomes the base cost for future ______ purposes.
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The court will require evidence that the fullest possible enquiries have been made to trace the missing ______.
The court will require evidence that the fullest possible enquiries have been made to trace the missing ______.
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A Benjamin order protects the ______ from liability.
A Benjamin order protects the ______ from liability.
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Applying to court is an expensive process, but it is the only solution that offers the PR full ______.
Applying to court is an expensive process, but it is the only solution that offers the PR full ______.
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The PRs will be personally liable if the assets have been distributed and an applicant under the Inheritance (Provision for Family and Dependants) Act ______ then successfully obtains an order.
The PRs will be personally liable if the assets have been distributed and an applicant under the Inheritance (Provision for Family and Dependants) Act ______ then successfully obtains an order.
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The PRs can protect themselves against liability by waiting more than ______ months following the date of the grant of representation before distributing the assets.
The PRs can protect themselves against liability by waiting more than ______ months following the date of the grant of representation before distributing the assets.
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The AEA ______ gives some powers specifically to PRs.
The AEA ______ gives some powers specifically to PRs.
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Assets which pass under the will or intestacy rules automatically devolve on the ______.
Assets which pass under the will or intestacy rules automatically devolve on the ______.
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For executors, devolution happens immediately on the ______.
For executors, devolution happens immediately on the ______.
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Study Notes
Administration of Estates
- Introduction: The administration period begins immediately after death and ends when assets are transferred to beneficiaries.
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Duties of Personal Representatives (PRs): PRs must collect, manage, and distribute the deceased's estate according to the law. They are personally liable for breaches of duty.
- Failure to protect asset value
- Failure to pay beneficiaries
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Protection for PRs: PRs can protect themselves from liability by advertising for unknown claimants/creditors and waiting the statutory minimum time before distributing assets
- Section 27 of the Trustee Act 1925 governs this process.
- Estate Accounts: PRs must prepare estate accounts detailing assets, expenses, and distributions, for beneficiary approval.
- Inheritance Tax: The process of dealing with inheritance tax liability during estate administration.
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Payment of Debts: PRs must pay funeral, testamentary expenses, and debts in a specific order as established in the law.
- Secured debts (like mortgages) take priority over unsecured debts
- Legacies: Paying legacies according to the terms of the will or intestacy laws.
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Distribution of Residuary Estate: Transferring remaining assets (residuary estate) to beneficiaries.
- Consider interim distributions, adult/minor beneficiaries, and estate accounts.
SQE1 Syllabus
- Wills: Validity, interpretation, and distribution of testate, intestate, and partially intestate estates
- Inheritance Tax: Lifetime gifts and transfers on death, claims made under the Inheritance (Provision for Family and Dependants) Act 1975
- Personal Representatives and Trustees: Rights, powers, and remedies of beneficiaries, and duties of PRs and trustees in administering estates
- Liability of PRs: Liabilities and protection for PRs acting in the estate administration.
- Distribution of Estates: Process of distributing the estate's assets.
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Inheritance Tax: Burden and incidence of inheritance tax, beneficiaries' liability,
- Includes a discussion of income tax and capital gain tax obligations.
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Description
This quiz covers the essential aspects of estate administration, including the duties of personal representatives, the protection measures available to them, and the preparation of estate accounts. It also addresses the management of debts and inheritance tax during the administration process. Test your knowledge on these crucial topics related to estate management.
