Could You Please Give Some Explanation Where Possible

COULD YOU PLEASE GIVE SOME EXPLANATION WHERE POSSIBLE?

Description

Introduction to Professional Practice - Wills and Administration of Estates 1

Instructions

The following questions test your knowldge and understanding of wills and the intestacy rules. Complete the questions as part of your preparation for the Wills and Administration of Estates 1 Unit. Complete them after you have finished the recommended reading.

Multiple Attempts

This Test allows multiple attempts

Question Completion Status:

Indicate which ONE of the following assets is capable of passing by will and, therefore, does not pass independently

Assume Harry had a life interest in a trust fund created on his father's death in 2003. The capital value of the fund is £200,000.The property passes to Harry's children under the terms of the trust. The value of the trust fund will form part of his estate for probate purposes. True False

QUESTION 1

Ann and Ben witness Tariq's signature on his will. In the will Tariq gives £3,000 to Ann and £2,000 to her husband, Hari.

Which TWO of the following statements are correct?

A. Tariq's will is invalid because it has been witnessed by a beneficiary.

B. Tariq's will is invalid because it has been witnessed by the spouse of a beneficiary.

C. Ann cannot take her legacy because she witnessed Tariq's will.

D. Hari cannot take his legacy because Ann witnessed Tariq's will.

QUESTION 2

Alan died intestate on three months ago. He is survived by his wife, Beatrice, and his daughter, Melanie. After payment of debts etc there is £800,000 plus personal chattels worth £2,000 available for distribution under the intestacy rules. Which ONE of the following CORRECTLY states the total amount Beatrice will receive?

A. £265,000.

B. £405,000.

C. £537,000.

D. £802,000.

QUESTION 3

Ian died intestate a week ago. His wife had died some years earlier. They had three children, Abe, Bill and Charlie. Abe died last year, with two children, Dee (6) and Eve (4). Bill also died last year with two children Freddie (18) and Greg (15). Charlie is still alive and has two children Hattie (20) and Ivy (18).

Which ONE of the following statements about entitlement to Ian's estate is CORRECT?

A. Freddie and Greg each have a contingent interest.

B. Dee and Eve each have a vested interest.

C. Chris has a contingent interest.

D. Hattie and Ivy both have no interest.

COULD PLEASE GIVE SOME EXPLANATION WHERE POSSIBLE ?

QUESTION 1

Christine was divorced from Scott many years ago. She now cohabits with Jeremy. Christine and Jeremy have one child, Jason (aged 20). Christine has one child, Christopher (aged 30), from her marriage to Scott. Jeremy has one child, Daisy (22), from an earlier marriage. Christine has just died intestate with £120,000 (plus personal chattels worth £5,000) available for distribution under the intestacy rules after payment of debts etc Which ONE of the following statements is CORRECT in relation to the amount available for distribution under the intestacy rules?

A. Jeremy is entitled to everything.

B. Christopher is entitled to nothing.

C. Daisy is entitled to nothing.

D. Jason is entitled to everything.

QUESTION 2

Sam dies intestate. He never married, formed a civil partnership or had children. His parents are both dead but he is survived by the following brothers and sisters, all of whom are unmarried and not in civil partnerships: Ann (25), Ben (22), Cleo (17) and Davina (8)

During the three months it takes to administer Sam's estate the following events occur: Ben and Davina are killed in a car crash. Cleo marries Bryn and dies of a tropical infection contracted on her honeymoon. Sam's estate is now ready for distribution and there is £600,000 available for distribution under the intestacy rules.

Ann (25), Ben (22), Cleo (17) and Davina (8) During the three months it takes to administer Sam's estate the following events occur: Ben and Davina are killed in a car crash. Cleo marries Bryn and dies of a tropical infection contracted on her honeymoon. Sam's estate is now ready for distribution and there is £600,000 available for distribution under the intestacy rules. Which ONE of the following statements is CORRECT?

A. Ben's estate will receive nothing from the intestacy.

B. Davina's estate will receive nothing from the intestacy.

C. Cleo's estate will receive nothing from the intestacy.

D. All of the property passing on intestacy will go to Ann.

COULD YOU PLEASE GIVE SOME EXPLANATION WHERE POSSIBLE?

QUESTION 1

Hari, who never married, dies in September 2020 having made no lifetime chargeable transfers. He leaves his entire estate to his brother. He has the following assets, and no debts: - House in sole name valued at £400,000 - Small shareholdings in a variety of quoted companies; in total these holdings are valued at £200,000 - Cash at the bank £100,000

Which TWO of the following statements are correct?

IHT will be payable at 40% on £700,000.

B. IHT will be payable at 40% on £375,000.

C. IHT will be payable at 36% on £700,000.

D. IHT will be payable at 36% on £375,000.

E. The whole of Hari's estate is chargeable for IHT purposes.

F. The first £325,000 of Hari's estate is exempt from IHT.

1 points QUESTION 2

Clara died on 3 February this year, leaving an estate on which IHT is payable. Her executor applied for the grant of probate in May. There was no need to pay the IHT on the non-instalment option property until the end of August. True False

1 points QUESTION 3

It is important to protect PRs from any possibility of personal liability.

Which ONE of the following statements is correct?

A. PRs should wait 6 months from death before distributing the estate. They will then be protected if someone makes a claim under the Inheritance (Provision for Family and Dependants) Act 1975. B. PRs should wait 6 months from the grant before distributing the estate. They will then be protected if someone makes a claim under the Inheritance (Provision for Family and Dependants) Act 1975. C. PRs should wait 2 months from the grant before distributing the estate. They will then be protected under the Trustee Act 1925, s27. D. The best way to protect the PRs from personal liability is to ensure that they take a personal indemnity from the beneficiaries.

1 points QUESTION 4

Indicate which ONE of the following items does NOT attract the instalment option? You may assume in all cases that paying the IHT in one sum will not cause hardship and that the IHT on all instalment option property is less than 20% of the total IHT payable. A freehold house. A 12% holding in an unquoted company valued at £8,000 (BPR is not available). A business run as a sole trader valued at £50,000 (BPR is not available). A half interest in a house held as beneficial joint tenants.

1 points QUESTION 5

Ted dies with instalment option property valued at £200,000 and non-instalment option property valued at £400,000. He has exhausted his nil rate band. None of his estate attracts any exemptions or reliefs. Which ONE of the following CORRECTLY states the amount of IHT payable on Ted's estate? £240,000. £160,000. £110,000. Nil.

1 points QUESTION 6

COULD YOU PLEASE GIVE SOME EXPLANATION WHERE POSSIBLE

QUESTION 1

Grace's only living relative is her brother, Quentin. She makes a will containing the following gifts: My Jaguar motor car, registration GGH 234X to Phoebe. My shares in Marks & Spencer plc to Quentin. The money in my Abbey account to Raj. My gold chain to Sanjit. The residue of my estate to Thalia.

After making her will and before her death the following events occur: She sells the Jaguar and buys a replacement. She sells her Marks & Spencer shares and reinvests the proceeds in Tesco shares. All her jewellery is stolen and she uses the insurance money to buy replacements. Raj and Thalia die.

Which ONE or more of the following statements is WRONG?

A. The gifts of the car, the shares and the gold chain fail as a result of ademption and the beneficiaries receive no compensation.

B. The gifts to Raj and Thalia fail as a result of the doctrine of lapse.

C. Quentin has no entitlement to any part of Grace's estate.

D. All of Grace's estate is undisposed of so it will pass under the intestacy rules to her only living relative, Quentin.

QUESTION 2

Drew dies on 24 June 2020. Included in his estate is his house, worth £500,000 at the date of death. Drew made no disposals in the tax year 2020/21. Assume that on 30 November 2020 his PRs sell the house for £550,000, and that they make no other disposals in the tax year 2020/21.

Which ONE of the following statements is CORRECT?

A. For CGT purposes the PRs have made a gain of £50,000 but they can deduct the annual exemption because PRs have a full annual exemption available to them in the tax year of death.

B. For CGT purposes the PRs have made a gain of £50,000 but they can deduct Drew's unused annual exemption.

C. For CGT purposes the PRs have made a gain of £50,000 but they can deduct Drew's unused annual exemption and their own annual exemption.

D. For CGT purposes the PRs have made a gain of £50,000 and no annual exemption is available to them.

QUESTION 3

The PRs of an estate have paid all the specific and pecuniary legacies and are about to complete the administration of the estate by paying the amount due to the residuary beneficiary, Raymond. They receive £2,000 income in dividends on shares held for Raj and £2,000 income from money in a building society account held for him.

Which ONE of the following statements is WRONG?

A. The PRs are not liable to income tax on income of an estate.

B. The PRs are not liable to higher rate income tax on income of an estate.

C. The PRs must give the residuary beneficiary a certificate of deduction of income tax.

D. Raymond may have to pay additional income tax on the £4,000 he receives from the PRs.

QUESTION 4

It is important to protect PRs from any possibility of personal liability. One of the steps that may protect them is to advertise under the Trustee Act 1925, s27 for claimants to the estate.

Which ONE of the following statements is CORRECT?

A. A PR who is also a beneficiary will be protected both as PR and as beneficiary from liability to a claimant appearing outside the 2 month period.

B. Provided the PRs have waited at least 2 months before distributing, any claimant appearing after that date will have no rights to recover any assets of the estate.

C. A claimant who appears after the expiry of the 2 month period can recover assets from the beneficiaries but not from the PRs.

D. A claimant who appears after the expiry of the 2 month period can recover assets from the PRs but not from the beneficiaries.

QUESTION 5

Wilfred dies with instalment option property valued at £200,000 and non-instalment option property of £400,000. He has exhausted his nil rate band and the residence nil rate band is not available. None of his estate attracts any exemptions or reliefs.

Which ONE of the following CORRRECTLY states the amount of IHT the PRs can pay in instalments?

A. £80,000

B. £240,000

C. £160,000

D. £36,667

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