Introduction to wills and estate planning - Overview of estate administration

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Overview

Familiarity with wills and estate administration is essential for aspiring solicitors, particularly for the SQE1 FLK2 exam. This guide explores the legal framework surrounding wills, the details of estate administration, and the duties of personal representatives. By understanding these concepts, you’ll be ready to handle the complexities of estate practice and excel in your exam preparation.

Legal Framework of Wills and Estate Planning

Statutory Requirements

The legal basis for wills and estate planning in England and Wales is primarily set by the Wills Act 1837, with later amendments. Section 9 specifies the formal requirements for a valid will:

  1. The will must be in writing.
  2. It must be signed by the testator or someone in their presence and by their direction.
  3. The testator's signature must be acknowledged with at least two witnesses present at the same time.
  4. Each witness must either sign the will or acknowledge their signature in the testator's presence.

Further legislation, including the Administration of Estates Act 1925 and the Inheritance (Provision for Family and Dependants) Act 1975, shapes the estate administration process.

Testamentary Capacity and Intention

A valid will requires that the testator has testamentary capacity. The landmark case of Banks v Goodfellow (1870) LR 5 QB 549 established criteria for this capacity:

  1. Understands the nature of making a will and its effects.
  2. Is aware of the property being disposed of.
  3. Recognizes the claims that should be considered.
  4. Has no mental disorder affecting their ability to dispose of their property appropriately.

The testator must also have the intent to make a will, as highlighted in Marley v Rawlings [2014] UKSC 2, where the Supreme Court noted the importance of intent in validating a will.

The Process of Estate Administration

Estate administration involves several key stages:

1. Identifying and Securing Assets

Personal representatives must locate and secure all the deceased's assets, including:

  • Real property (land and buildings)
  • Personal property (bank accounts, investments, vehicles, jewelry)
  • Digital assets (online accounts, cryptocurrencies)

The case of Swinburn v Swinburn [2016] EWHC 2344 (Ch) highlighted the importance of thorough asset identification, especially in complex estates.

2. Obtaining Grant of Representation

Depending on the presence of a valid will, personal representatives must obtain:

  • Grant of Probate (if a valid will exists)
  • Letters of Administration (if there is no valid will or no executor named)

This process involves submitting an application to the Probate Registry, including the original will (if applicable) and an Inheritance Tax account.

3. Paying Debts and Taxes

Before distributing assets, personal representatives must settle all estate debts and tax liabilities, including:

  • Funeral expenses
  • Outstanding debts and bills
  • Inheritance Tax (if applicable)
  • Income Tax and Capital Gains Tax up to the date of death

Re Vos [1967] 1 WLR 1593 established that personal representatives must pay debts before distributing the remainder of the estate to beneficiaries.

4. Distribution of Assets

After settling debts and taxes, remaining assets are distributed according to the will or, in intestacy, per the rules in the Administration of Estates Act 1925.

Roles and Responsibilities of Personal Representatives

Personal representatives are key to estate administration, with duties and powers derived from both common law and statute.

Executors

Executors named in the will are responsible for:

  1. Identifying and collecting the deceased's assets.
  2. Paying off debts and taxes.
  3. Distributing the estate according to the will's instructions.

Nestle v National Westminster Bank plc [1993] 1 WLR 1260 emphasized that executors must act in the beneficiaries' best interests and use reasonable care and skill in administration.

Administrators

Administrators are appointed by the court when:

  • There is no valid will (intestacy).
  • The will does not name an executor.
  • The named executor cannot or will not act.

Administrators have similar responsibilities to executors but must follow intestacy rules for estate distribution.

Example: Complex Estate Administration

Consider Mr. Smith, a wealthy businessman with a complex estate:

  • A family home
  • A holiday property in France
  • Shares in various companies
  • An art collection
  • Large cash savings

Mr. Smith's will appoints his solicitor, Ms. Johnson, as executor. Her responsibilities include:

  1. Obtaining valuations for all assets, including the art collection.
  2. Addressing cross-border issues for the French property.
  3. Calculating Inheritance Tax and considering reliefs or exemptions.
  4. Managing business interests with complex tax considerations.
  5. Distributing specific legacies before dividing the residuary estate.

This example highlights the challenges that can arise in estate administration, needing executors to have a thorough knowledge of legal principles and practical details.

Legal Challenges in Estate Administration

Estate administration can involve legal challenges, such as:

1. Contentious Probate

Disputes over the will's validity or actions of personal representatives may arise. Hawes v Burgess [2013] EWCA Civ 94 involved a will challenge based on lack of capacity and undue influence, highlighting complex evidential issues.

2. Claims under the Inheritance (Provision for Family and Dependants) Act 1975

This Act allows certain individuals to claim reasonable financial provisions from an estate. Ilott v The Blue Cross and others [2017] UKSC 17 provided guidance on the court's approach to these claims, noting the wide discretion given to judges.

3. Rectification and Construction

Wills with errors or ambiguities may require court intervention. Marley v Rawlings [2014] UKSC 2 clarified principles for rectification of wills, distinguishing between correcting clerical errors and issues of construction.

Conclusion

A thorough knowledge of wills and estate administration is essential for success in the SQE1 FLK2 exam and future legal practice. This area requires understanding statutory requirements, case law principles, and practical procedures. Key points include:

  1. The formal requirements for a valid will under the Wills Act 1837.
  2. The importance of testamentary capacity and intention.
  3. The stages of estate administration, from asset identification to distribution.
  4. The roles and responsibilities of executors and administrators.
  5. Potential legal challenges in estate administration, including contentious probate and claims under the Inheritance Act 1975.

By building a strong understanding of these areas, aspiring solicitors will be prepared to manage the complexities of estate planning and administration in their careers.