Administration of estates - Duties of personal representatives

The answers, solutions, explanations, and written content provided on this page represent PastPaperHero's interpretation of academic material and potential responses to given questions. These are not guaranteed to be the only correct or definitive answers or explanations. Alternative valid responses, interpretations, or approaches may exist. If you believe any content is incorrect, outdated, or could be improved, please get in touch with us and we will review and make necessary amendments if we deem it appropriate. As per our terms and conditions, PastPaperHero shall not be held liable or responsible for any consequences arising from the use of the content on this page. This includes, but is not limited to, incorrect answers in assignments, exams, or any form of testing administered by educational institutions or examination boards, as well as any misunderstandings or misapplications of concepts explained in our written content. Users are responsible for verifying that the methods, procedures, and explanations presented align with those taught in their respective educational settings and with current academic standards. While we strive to provide high-quality, accurate, and up-to-date content, PastPaperHero does not guarantee the completeness or accuracy of our written explanations, nor any specific outcomes in academic understanding or testing, whether formal or informal.

Overview

Managing estates is a key topic for the SQE1 FLK2 exam, focusing on the roles of personal representatives. This guide explores the responsibilities, from asset collection to final distribution. Understanding the legal rules and potential issues in estate administration is vital for exam success. By examining the details of this role, candidates can sharpen the critical thinking skills needed for the SQE1 FLK2.

Legal Framework and Appointment of Personal Representatives

Statutory Basis and Common Law Principles

The duties of personal representatives are outlined by the Administration of Estates Act 1925. Section 25 specifies their general powers and duties, with further sections offering detailed responsibilities. Common law also provides guidance in understanding these duties.

Types of Personal Representatives

  1. Executors: Named in the will by the testator.
  2. Administrators: Appointed by the court when there is no valid will or if executors cannot act.

Grant of Representation

Personal representatives must obtain a grant from the Probate Registry to administer the estate:

  1. Grant of Probate: For executors in a valid will.
  2. Letters of Administration: When there is no will or executors are unavailable.

Example: In Re Salomons [1920] 1 Ch 290, the court noted that executors’ authority arises from the will, but they cannot handle property without probate.

Key Duties of Personal Representatives

Asset Collection and Valuation

Representatives must create an inventory and value assets, including:

  1. Identifying all assets
  2. Securing physical property
  3. Obtaining expert valuations
  4. Managing bank accounts and funds

Example: With an estate that includes a business, real estate, and art, the representative might need:

  • An accountant for the business
  • A surveyor for real estate
  • An art appraiser for the collection

Settling Debts and Taxes

This involves:

  1. Verifying and prioritizing creditors’ claims
  2. Calculating and paying inheritance tax
  3. Handling income and capital gains taxes

Section 34 of the Act sets the order for paying debts. Representatives must ensure all liabilities are settled to avoid personal responsibility.

Legal Insight: In Re Tankard [1942] Ch 69, “executor’s year” was established for estate administration before distribution.

Distribution of the Estate

After debts, distributing assets involves:

  1. Following the will or intestacy rules
  2. Locating beneficiaries
  3. Distributing specific and residuary bequests

Complex Scenario: With a family business in the estate, if not all children want involvement, the representative might consider a buyout or family trust, evaluating tax and legal considerations.

Advanced Considerations in Estate Administration

Dealing with International Assets

Global complexities require representatives to handle:

  1. Domicile and succession laws
  2. Foreign probate and tax requirements
  3. Currency and tax issues
  4. Collaborating with international experts

Example: An estate with Spanish property and a Swiss account needs careful navigation of each country’s requirements and might involve local advisors.

Contentious Probate and Dispute Resolution

Representatives may face will challenges or beneficiary disputes. They should:

  1. Stay neutral and protect the estate’s interests
  2. Seek legal counsel quickly
  3. Consider mediation
  4. Apply for court guidance if needed

Legal Precedent: Larke v Nugus [2000] WTLR 1033 requires solicitors involved in a disputed will to offer preparation details.

Ongoing Estate Management

For estates involving trusts, representatives must:

  1. Invest carefully under the Trustee Act 2000
  2. Keep accurate records and reports
  3. Decide on asset distribution timing
  4. Consider long-term tax strategies

Liabilities and Protections for Personal Representatives

Representatives can be personally liable for errors. To reduce risks, they should:

  1. Keep detailed records
  2. Get professional advice as needed
  3. Consider indemnity insurance
  4. Advertise for creditors under Section 27 of the Trustee Act 1925

Case Study: In Sheehan v Breccia [2017] EWHC 1129 (Ch), executors faced personal costs for unnecessary litigation, emphasizing careful decision-making.

Conclusion

Personal representatives’ duties are detailed and legally demanding. Success in the SQE1 FLK2 exam requires understanding the legal principles and practical challenges of estate administration. Key aspects include:

  1. Obtaining the grant of representation
  2. Conducting thorough asset inventories
  3. Fulfilling debt and tax obligations
  4. Carefully managing complex distributions
  5. Navigating international legal issues
  6. Managing long-term estate responsibilities
  7. Mitigating personal liability

By mastering these areas, candidates will be ready to tackle estate administration questions confidently in the SQE1 FLK2.