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LPC Law Notes Private Client Notes

Post Grant Practice Notes

Updated Post Grant Practice Notes

Private Client Notes

Private Client

Approximately 235 pages

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Wills & Administration of Estates

LPC Exam Revision

Administration: Post Grant Practice

Duties of a Personal Representative

The key duty of a PR is to ‘collect and get the real and personal estate of the deceased and administer it according to the law’ (i.e. collect assets the deceased was entitled to at death, pay debts and distribute the residue).

These duties must be performed with due diligence and PRs have a duty to take reasonable steps to preserve the value of the estate and to carry out the process with 12 months from the date of the death.

Breach of Duties

A breach of duty means the PR is personally liable for any loss. The PRs must exercise reasonable care and skill, having regard to special knowledge and experience, professions and the reasonable expectations of the PR.

Action can be taken by a creditor or beneficiary who has suffered loss as result of the breach of duty.

Powers of a Personal Representative

The PRs have certain powers to carry out their duties, the source of their powers can come from statute and/or the deceased’s will (if there is one).

PRs are in a fiduciary position and must act in the utmost good faith and must not profit from their position.

Statutory Powers

Power to Invest

This allows PRs to invest and hold assets for the foreseeable future rather than distribute them. This general power is found in s.3 TA 2000 and states that the trustees have the power to extend as if they were absolutely entitled to the assets. This includes acquiring freehold and leasehold land (s.8)

PRs must have regard to ‘standard investment criteria’ (s.4) in relation to suitability and diversity. And unless they think it unnecessary, they must obtain proper advice.

Power to

Appropriate

PRs can appropriate an asset - i.e. choose which assets in an estate to meet the beneficiary’s entitlement. This power can only be used if it does not involve prejudice, the beneficiary must consent and the value of the asset must be taken at the date of transfer rather than death.

Power of

Maintenance

PRs can deal with income generated by assets held on trust. For deaths after October 2014 trustees have complete discretionary power to apply income generated by trusts for minor beneficiaries’ maintenance, education or benefit.

Trustees must accumulate the balance of income not applied. If the beneficiary is entitled to the capital at an age after 18, the trustees must pay the income to the minor.

For deaths before October 2014 the trustees only had the power to apply income which was reasonable in line with statutory requirements.

Power to Advance

Capital

After October 2014 trustees can advance capital to a beneficiary before they reach the age they are entitled to the trust, this is treated as an advancement of the overall value of the trust.

Before October 2014, trustees were limited to advancements only up to of the beneficiary’s share

Power to Insure s.34 TA 2000 allows PRs to insure assets and pay the premiums out of the income or capital
Power to Appoint a Trustee When a legacy is given to a minor, the PRs cannot distribute it until they reach the age of 18. To prevent any delay of the administration, the PRs can appoint a trustee under s.42 AEA.
Power to Postpone Distribution Reasonable steps must be taken to preserve the value of the estate, PRs can delay distribution to realise investments.
Power to Delegate PRs can delegate to agents - e.g. investing trust assets
Power of Sale and Management TOLATA 1996 allows for PRs to sell assets to raise cash to meet estate obligations.
Implied Indemnity for Expenses s.31 TA 2000 permits PRs to reimburse themselves for expenses incurred in acting on behalf of the estate.
Remuneration for Services

s.29 TA 2000 allows professional PRs (e.g. solicitors) to claim reasonable remuneration for their services provided they are not acting alone and those co- PRs give their written consent.

This payment is not considered a gift (s.28)

Non-Statutory Duties

The will may give the PRs other powers and any restrictions on these additional powers. Common additional powers include the power to run a business (i.e. sell the business as a going concern).

Safeguards for PRs During Administration

PRs are personally liable for any loss arising from their failure to carry out their duties.

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Court Guidance

If the PRs foresee difficulty and are concerned they may incur personal liability they can request guidance from the court. The court can either administer the estate itself or give guidance...

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