WILLS AND ADMINISTRATION vol 42

WILLS AND ADMINISTRATION vol 42(3) specialist topics

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About this title—authors, overview

Commentary

1 General points on nil rate band discretionary will trusts

2 The inheritance tax spouse/civil partner exemption

3 Why nil rate band trusts were included in wills before 2007

4 General considerations about nil rate band trusts

5 Impact of legislative changes on nil rate band trusts

6 Inheritance tax planning before transferable unused nil rate band

7 Impact of transferable unused nil rate band on gifts between spouses and civil partners

8 Amount settled in nil rate band discretionary trust

9 Funding a nil rate band discretionary trust

10 The scrutiny of nil rate band trusts

11 Avoiding objections to nil rate band discretionary trusts

12 Advantages of debt or charge schemes

13 Who should be trustees of a nil rate band trust?

14 Debt arrangements for funding nil rate band discretionary trust

15 Charge method for funding nil rate band discretionary trust

16 Drafting the charge and assent of deceased’s property

17 The deduction rules in general

18 The artificial debt rules in the Finance Act 1986

19 The Phizackerley decision

20 Practical advice in connection with the Finance Act 1986 Section 103

21 Stamp duty land tax problem

22 HM Revenue and Customs guidance on stamp duty land tax and debt or charge schemes

23 Practical conclusions of HMRC guidance on stamp duty land tax and debt or charge schemes

24 When nil rate band trusts are unwanted

25 Mechanics of ending a nil rate band discretionary trust

26 Appointment of nil rate band trust property before assets have vested in the trustees

27 Trustees and personal representatives may be different

28 Capital gains tax considerations for nil rate band discretionary trusts

29 Issues with family home as testamentary property

30 Typical fact situations involving the family home

31 Specific bequest of family home or family home as part of residue?

32 Agricultural property relief for the family home

33 Business property relief for the family home

34 Specific gift of property attracting agricultural property relief or business property relief

35 Heritage property relief for family home

36 Determining deceased’s interest in land

37.1 Introduction

37.2 Declarations as to beneficial interest conclusive

37.3 Stack v Dowden

37.4 Jones v Kernott

37.5 Recent cases

37.6 Attitude of HM Revenue and Customs

38 Proprietary estoppel claims: promises to leave the family home by will

39 Proprietary estoppel and valuation of deceased’s interest in family home

40 Inheritance tax principles when valuing deceased’s interest in the family home

41 The related property rules for spouses and civil partners

42 Aggregation of settled property

43 Options

44 Capital gains tax base cost when valuing deceased’s interest in the family home

45 Statutory rules on intestacy as applied to the family home

46 Use of nil rate band of inheritance tax and the family home

47 Tenancy in common or joint tenancy ownership of family home?

48 Protecting the surviving spouse or civil partner in relation to the family home

49.1 The choice between outright gift and settlement of deceased’s interest

49.2 The Lloyds Private Banking case

49.3 The Vincent case

49.4 Conclusions on the disposition of the family home

50 Express gift into settlement of the family home

51 HM Revenue and Customs Statement of Practice SP 10/79: the text

52 Case law on leaving a half-share in the family house to a discretionary will trust

53 Does it matter if there is an interest in possession in the family home after 21 March 2006?

54 Approach of HM Revenue and Customs to leaving a half-share in the family house in a discretionary will trust

55 Avoiding scope of HM Revenue and Customs Statement of Practice SP 10/79

56 HM Revenue and Customs Statement of Practice SP 10/79: other points

57 Avoiding a discretionary trust of the family home

58 Creation of ‘revertor to settlor’ settlement of family home by deceased’s children

59 Introduction to leaving the family home on flexible immediate post-death interest (‘IPDI’) trusts

60 Implications of the Finance Act 1986 Section 102ZA

61 Limitations of the Finance Act 1986 Section 102ZA

62 Tax planning to avoid the Finance Act 1986 Section 102ZA

63 Overriding powers and the residence nil rate band

64 Mortgages of family home and death of a spouse or civil partner

65 Cohabitees and disposition of share in home of first cohabitee to die

66 Inheritance (Provision for Family and Dependants) Act 1975 and the family home

67 Post-death planning

68 Payment of inheritance tax in relation to the family home

69 Capital gains tax: deceased’s estates and will trusts

70 Dealing with different business structures of a testator’s business

71 Business in which testator is a sole trader

72 Formation of a partnership for testator’s family business

73 Running of a business by executors and trustees

74 Incorporated businesses of testators

75 Inheritance tax on business property

76 Farming businesses of testators

77 Agricultural tenancies

78 Providing for all the family out of a testator’s farm business

79 General points on inheritance tax agricultural property relief and business property relief

80 When business property relief from inheritance tax is available

81 Conditions for business property relief from inheritance tax to be available

82 Which businesses qualify for business property relief?

83 Brander case

84 ‘Conacre’ case

85 Settled property as relevant business property for the purpose of business property relief

86 Instalment option for paying inheritance tax

87 Lifetime gifts and the clawback of business property relief

88 Life or death gifts and business property relief

89 Problems of will drafting related to business property relief from inheritance tax

90 Business property and nil rate legacies under testator’s will

91 Introduction to agricultural property relief

92 Meaning of agricultural property

93 ‘Character appropriate’: meaning

94 Golding case on whether a farmhouse is ‘character appropriate’

95 Nexus between farmhouse and farm land in order for farmhouse to be ‘character appropriate to the property’

96 Agricultural value of agricultural property qualifying for inheritance tax relief

97 Level of agricultural property relief

98 Ownership and occupation requirements for agricultural property relief

99 Trusts, companies and agricultural property relief

100 Tax planning and will drafting to take into account agricultural property relief

101.1 Introduction to the Mental Capacity Act 2005

101.2 Presumption under the Mental Capacity Act 2005

101.3 Principles under the Mental Capacity Act 2005

102 Requirements for a valid will

103 Introduction to principles of testamentary capacity

104 Presumption of capacity under the Mental Capacity Act 2005

105 Burden of proof for testamentary capacity

106 Standard of proof for testamentary capacity

107 Presumptions of testamentary capacity

108 Banks v Goodfellow: leading case on testamentary capacity

109 When testamentary capacity is required

110 Instructions given via a third party

111 Golden Rule for assessing testamentary capacity

112 Roles of lawyers and doctors in determining testamentary capacity

113.1 Choice of doctor to assess testamentary capacity

113.2 Instructions to be given to doctor to assess testamentary capacity

114 Assessment by doctor of testator’s mental state

115.1 Introduction to enhancing testamentary capacity

115.2 Physical issues that may affect testamentary capacity

115.3 Timing and location of assessment: factors that may enhance testamentary capacity

115.4 Carrying out assessment so it enhances testamentary capacity

116 Law Commission project

117 Healthcare choices and advance decisions

118 Advance decisions: Mental Capacity Act 2005 and the position in common law

119.1 Introduction to assisted suicide and advance decisions

119.2 Public interest factors that tend in favour of a prosecution for assisted suicide

119.3 Public interest factors that tend against a prosecution for assisted suicide

120.1 Creating an advance decision: validity requirements at the time of creation

120.2 Following an advance decision: validity requirements at the time

121 Capacity to make valid advance decision

122 Withdrawal with capacity of advance decision

123 Other actions ‘clearly inconsistent’ with advance decision

124 Non-life sustaining treatment advance decisions: forms and formalities

125.1 Meaning of ‘life-sustaining treatment’

125.2 Form and formalities of an advance decision to refuse life-sustaining treatment

125.3 Transitional provisions concerning existing advance decisions to refuse life-sustaining treatment

126 Treatment in the absence of advance decision

127 Health and welfare lasting powers of attorney

128 Personal welfare lasting power of attorney

129 Interaction between lasting powers of attorney and advance decisions

130 Introduction to case law

131.1 A local authority v E

131.2 A primary care trust and P v AH and a local authority: assessment of health needs

131.3 DH NHS Foundation Trust v PS: medical treatment consent

131.4 Newcastle-upon-Tyne Hospitals Foundation Trust v LM

131.5 Barnsley Hospital NHS Foundation Trust v MSP: removal of patient's life support

131.6 Re PW (Jehovah’s Witness: Validity of Advance Decision): invalid advance decision by Jehovah's Witness

132.1 Re AK (medical treatment: consent)

132.2 Re B (adult: refusal of medical treatment)

132.3 HE v a Hospital NHS Trust

132.4 R (on the application of Burke) v General Medical Council

133.1 Autonomy

133.2 Documentation of wishes

133.3 Dialogue

133.4 Aid to doctors

133.5 Relief to the family

134.1 Ambiguity

134.2 Misdiagnosis

134.3 Medical advances

134.4 Medical discretion

134.5 Undue influence

135 Liability of healthcare professionals

136 Responsibilities of healthcare professionals

137 Treatment in emergencies or in the case of disagreement

138 Role of the Court of Protection

139 Conscientious objection

140 General points on disabled or infirm beneficiaries

141 Typical scenarios involving disabled or infirm beneficiaries

142 Themes of scenarios involving disabled or infirm beneficiaries

143 Means-testing of government benefits for disabled/infirm beneficiaries

144 Providing for disabled or infirm beneficiaries without affecting means-tested benefits: trusts

145 Should a trust for a disabled/infirm beneficiary be set up during lifetime or on death?

146 Appointment of guardians for disabled/infirm beneficiaries

147.1 Preliminary points on providing for disabled/infirm beneficiaries

147.2 Options for estate planning involving disabled/infirm beneficiaries

147.3 Tax considerations when choosing a trust for a disabled or infirm beneficiary

148.1 Meaning of ‘disabled person’ for tax reliefs

148.2 Section 89 trusts for disabled persons

148.3 Section 89A trusts and Section 89B trusts for disabled persons

148.4 Inheritance tax and trusts for disabled persons

149 Capital gains tax and trusts for disabled persons

150 Conclusions on Section 89 trusts for disabled persons

151 Drafting of Section 89 trusts for disabled persons

152 Reasons for charitable gifts by will

153 Varieties of charitable gift by will

154 General points on drafting and construing charitable legacies

155.1 Berry v IBS-STL Ltd

155.2 Re ARMS (Multiple Sclerosis Research) Ltd

155.3 Phillips v Royal Society for the Protection of Birds

156 Drafting will clauses to avoid problems with construing charitable gifts

157 STEP Standard Provisions on charitable gifts

158 Conclusions on drafting gifts to charities by will

159 Use of property given to charities by will

160 Specific gifts to charities by will

161 Condition precedent in gift to charity by will

162 Validity of gift to foreign charity by will

163 Tax implications of gifts to foreign charities made by will

164 Conditions for charitable tax reliefs

165 Inheritance tax treatment when residue to be divided between charity and non-charity

166 Gift aid and inheritance tax relief: the ‘double dip’

167 Obtaining gift aid on charitable gifts made by variation of a will

168 Share aid and land aid for charitable gifts

169 Inheritance tax relief to encourage charitable giving

170 Composition of an inheritance tax estate

171 Allocating nil rate band of inheritance tax

172 Statutory components of an inheritance tax estate for reduced rate

173 Operation of the inheritance tax reduction when 10% of net estate left to charity

174 When reduced rate of inheritance tax is available for estates leaving 10% of net estate to charity

175 Electing to merge components (and to merge with reservation of benefit property)

176 Opting out of lower inheritance tax rate–10% of net estate left to charity

177 Miscellaneous technical provisions–reduced rate of inheritance tax

178 Practical implications of the reduced rate of inheritance tax provisions

179 Drafting to take advantage of reduced inheritance tax rate

180 Estates with a foreign element

181 Considerations when advising a testator with foreign assets

182 Capacity to make a will with a foreign element

183 Recognition of wills

184 Applicable law to a will with a foreign element

185 Community of property

186 Concept of testamentary freedom

187 Forced heirship principles

188 Assets subject to forced heirship

189 Religious law restrictions on testamentary freedom

190 Other considerations on testamentary freedom

191 Declarations of domicile in wills with a foreign element

192 Declarations of applicable law in wills with a foreign element

193 Appointment of executors of a will with a foreign element

194 Appointment of separate executors of foreign assets

195 Power to appoint agents in a will with a foreign element

196 Charging clauses, indemnities and exculpation clauses in a will with a foreign element

197 Situs of assets of testator

198 Situs of debts of testator

199 Taxation treatment of international estates

200 Burden of taxation in international estates

201 Use of trusts in will with a foreign element

202 Planning through mirror and mutual wills and similar arrangements

203 When an English will with worldwide effect is appropriate

204 Revocation clause in English will dealing with worldwide assets

205 Gifts made under English will that deals with worldwide assets

206 Other clauses for use in English will dealing with worldwide assets

207 Problems of a single will dealing with all worldwide assets

208 When separate wills for foreign assets and English assets are appropriate

209 Revocation of separate wills for foreign assets and English assets

210 Gifts made under separate wills for foreign assets and English assets

211 Other clauses for use in separate wills for foreign and English assets

212 Problems of separate wills for foreign assets and English assets

213 Applicable law of intestacy to international estates

214 Partial intestacy of international estates

215 Background to variation of a will

216 The effect of the introduction of the transferable nil rate band on variations

217 The effect of the introduction of the residence nil rate band on variations

218 Variations and disclaimers contrasted

219 Variation or disclaimer

220.1 Conditions to be satisfied

220.2 ‘Reading back’

221 Technical difficulties and traps

222 Successive variations and multiple disclaimers of the same property

223 Rectification

224 The short-lived interest trap

225 Varying or disclaiming a life interest after the death of the life tenant

226 Parents or guardians acting on behalf of a minor

227 Not possible to vary a settled gift unless all beneficiaries join in

228 The ‘double-dip’

229 Inheritance tax effect of redirecting a gift of assets which have been sold

230 Appointments/advancements followed by a variation

231 Basic rule

232 Reading back for capital gains tax purposes

233.1 The issue

233.2 The taxpayer’s argument

233.3 House of Lords speeches

233.4 Legislative clarification

233.5 Conclusions

234 Capital gains tax effect of redirecting a gift of assets which have been sold

235 General—income tax

236 Stamp duty

237 Stamp duty land tax

238 No reading back for other purposes

239 Statutory scheme for provision for deceased’s dependants

240 Persons who can apply for statutory provision from deceased’s estate

241 Meaning of ‘reasonable financial provision’ under the Inheritance (Provision for Family and Dependants) Act 1975

242.1 Time limit for application under the Inheritance (Provision for Family and Dependants) Act 1975

242.2 Application under the Inheritance (Provision for Family and Dependants) Act 1975 before issue of grant

242.3 Use of so-called ‘standstill agreements’

242.4 Protection of personal representatives under the Inheritance (Provision for Family and Dependants) Act 1975

243.1 Matters to be considered in relation to all categories of applicants

243.2 Matters to be considered in relation to applications by a surviving or former spouse or civil partner

243.3 Matters to be considered in relation to applications by persons living in one household as husband and wife or as civil partners

243.4 Matters to be considered in relation to applications by a child of the deceased

243.5 Matters to be considered in relation to applications by person treated as a child of the family of the deceased

243.6 Matters to be considered in relation to applications by person maintained by the deceased

244 Definition of ‘net estate’ for purposes of Inheritance (Provision for Family and Dependants) Act 1975

245 Orders available under the Inheritance (Provision for Family and Dependants) Act 1975

246 Variation, discharge and suspension of orders for periodical payments

247.1 General points on dispositions intended to defeat applications

247.2 Further dispositions and the Inheritance (Provision for Family and Dependants) Act 1975 Section 10

247.3 Prior distributions by personal representatives and trustees

247.4 Relationship between Inheritance (Provision for Family and Dependants) Act 1975 Section 10 and the Insolvency Act 1986 Section 423

248.1 General points on contracts to leave property by will

248.2 Prior distributions by personal representatives and trustees

249 Exclusion by a divorce court or on dissolution of a civil partnership of claims under the Inheritance (Provision for Family and Dependants) Act 1975

250 Relationship to other matrimonial orders and maintenance agreements of orders under the Inheritance (Provision for Family and Dependants) Act 1975

251 Commencement of proceedings under the Inheritance (Provision for Family and Dependants) Act 1975

252 Parties to proceedings under the Inheritance (Provision for Family and Dependants) Act 1975

253 Evidence in proceedings under the Inheritance (Provision for Family and Dependants) Act 1975

254 Settlement of Inheritance (Provision for Family and Dependants) Act 1975 proceedings

255 Costs in proceedings under the Inheritance (Provision for Family and Dependants) Act 1975

256 Effect of order under the Inheritance (Provision for Family and Dependants) Act 1975

257 Modern incidence of estates with a foreign element (the international estate)

258 Checklist for practitioners when dealing with international estates

259 The deceased with international connections

260 Identity of the client in relation to the international estate

261 Appropriate advice on an international estate

262 Extent of the deceased’s international estate

263 Community of property

264 Notional estate for forced heirship purposes

265 Trusts and estates with a foreign element

266 General principles relating to applicable law of international estate

267 The EU Succession Regulation and governing law

268 Location of estate assets

269 Conflict of laws and estates with a foreign element

270 Renvoi and international estates

271 Is there a will relating to the international estate?

272.1 Introduction to formal validity of will with a foreign element

272.2 Form of will with a foreign element

272.3 Execution of will with a foreign element

272.4 Revocation of will with a foreign element

273.1 Introduction to admissibility or substantive validity and essential or material validity of wills with a foreign element

273.2 Capacity of testator of will with a foreign element

273.3 Content of will with a foreign element

274 Provisions conflicting with forced heirship rights

275 Validity of legacies and gifts in a will with a foreign element

276 Who may benefit under a will with a foreign element?

277 How intestacy may arise for an estate with a foreign element

278 Governing law for intestacy

279 Effects of intestacy on estates with a foreign element

280 Common law requirement for executors of estate

281 Civil law position on administration of estate

282 Civil law executors

283 Practical considerations for the administration of estates with a foreign element

284 Dealing with a UK estate with international elements

285 Dealing with an international estate with English elements

286 Dealing with an international intestacy

287 Taxable estate and the taxpayers in an estate with a foreign element

288 Taxation treatment in United Kingdom of foreign assets

289 Taxation of estates abroad

290 Executors’ position in relation to the taxation of estates with a foreign element

291 Definition of an ‘insolvent’ estate

292 The general principles—application of bankruptcy law

293.1 General

293.2 Intermeddling

294 Death after the making of a bankruptcy application or the presentation of a bankruptcy petition

295 Administration in other cases—the options available

296 Position if a debtor dies after making a bankruptcy application or after a bankruptcy petition is presented

297 Submitting a statement of affairs

298 Funeral and testamentary expenses

299 Death before approval of an individual voluntary arrangement

300 Death after approval of an individual voluntary arrangement

301 General administration order

302 Procedure for obtaining an order

303 Application of the general law of bankruptcy

304 Petition for an insolvency administration order

305 Position if proceedings already begun for general administration order

306 Service of petition

307 Composition of the estate

308 Powers exercisable by the deceased over or in respect of property

309 Saving for third party rights

310 Restrictions on dispositions of property—Insolvency Act 1986 Section 284

311 Restriction on proceedings and remedies—Insolvency Act Section 285

312 Appointment of an interim receiver

313 Powers of an interim receiver

314 First trustee in bankruptcy

315 Investigatory powers of the official receiver

316 The statement of affairs

317 Duties of personal representatives of a deceased debtor to the official receiver

318 Duties of the personal representatives to the trustee

319 Appointment and removal of trustee; the creditors’ committee; administration by the trustee

320 Basic rule in relation to the administration of a deceased person’s estate by the personal representatives out of court

321 Choice of method of administration of the insolvent estate of a deceased person

322 Joint tenancies

323 Insolvency Act 1986 Section 421A

324 Tenancy in common of land

325 Disclaimer of leases and onerous property

326 Transactions at an undervalue and preferences

327 Transactions defrauding creditors

328 Recovery of debts and liabilities

329.1 Order of priority—general

329.2 Secured creditors

329.3 Debts preferred by statute

329.4 Bankruptcy expenses

329.5 Funeral, testamentary and administration expenses

329.6 Preferential debts

329.7 Ordinary debts

329.8 Interest

329.9 Deferred debts

330 Valuing future and contingent liabilities

331.1 Liability where personal representative fails to pay debts and observe the order of priority

331.2 Protection of personal representatives

331.3 Protection by advertising

331.4 The position of the trustee in bankruptcy

332 Surplus remains after payment in full

333 Administration in bankruptcy

334 Administration by the personal representatives outside bankruptcy

335 Beddoe application

336 Introduction

337 The Shia Ithna-Asheri sect

338 The role of the A’alam Mujtahid

339 ‘Shia principles’

340 Disposal of the body

341 Choice of executors

342 Rules relating to executors

343 Duties of executors

344 Rules governing the distribution of the net estate

345 Persons unable or unwilling to inherit

346 Glossary of expressions

347 The free right of disposal as to one-third

348.1 Wife

348.2 Husband

349.1 Categories of Shia heirs

349.2 Category 1

349.3 Category 2

349.4 Category 3

349.5 Long-stop as regards categories 1, 2 and 3

350.1 General rule

350.2 Exclusions from radd

351 Reduction of beneficiaries’ shares

352 No person entitled to benefit

353 The duty to make a ‘good’ will

354 Difficulties that may arise in will drafting under Shia principles in England and Wales

355 Practical solutions

356 Waiver, release or consent of all of the affected beneficiaries to a proposed distribution

357.1 Bequest to nominated beneficiary indicating that Shia principles be applied

357.2 Discretionary trust with letter of wishes to trustees

358.1 Will providing for distribution by a general reference to Shia principles or by reference to the legal rulings of an A’alam Mujtahid

358.2 Will providing that every entitled beneficiary receives the specified portion of his share of the estate in accordance with Shia principles

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