Inheritance - divvying up the estate of Mr Dog

John_Pierpoint

John_Pierpoint wrote: »

Hi Rob and Localhero,

I did think of having a go at the retired solicitor - but decided that would just delay things further.

I think you might both be wrong about the order of payout, but I need to consult some more authoritative legal books than are available to me here in Essex.
Next time I'm going to London I will try Camden(Holborn)/Guild Hall/C-o-L Business library/read the books in the legal book shop;) and check my theory.

Back at the start of this process I did a similar check, and got excited about something called "hotchpot" that had be torn out of a reference book.
A bit more research proved it had been ripped out because it was obsolete:D

The 1920's were a fertile time for cleaning up England's laws to avoid the Jarndyce and Jarndyce situation in "Bleak House".

Land Law was cleaned up and so was the "Administration of Estates".
The AEA 1925 originally handled solvent and insolvent estates; but the latter function has been taken over by a later insolvency act.

The principal appears to be: "The rules in the will must be respected as far as is possible however here are the default rules for situations not covered in the will"

When it comes to distributing the residuary of Mr Dog's estate, the will reads:
Subject to the payment of my funeral testamentary expenses debts and forgoing legacies..................................................I bequeath all the rest residue & remainder of my estate..................................

In other words it says "pay my debts and expenses" from the residuary. and that is what I must do.

I would think that this type of wording is now common to most wills HOWEVER had the will been silent on the settlement of debts and expenses then the rules in AEA 1925 would have clicked in. This act includes Schedule 1 part 2 which lists the default order of applying costs to the assets:

1. [use] Property of the deceased undisposed of by will.. . ie the intestate part of the will.

Many thanks everyone for for your help and ideas.

John.

(My thanks to "Sweet & Maxwell's 2003 version of "Wills Administration & Taxation - A Practical Guide" held by Camden Libraries, Theobalds Road)

PS

Originally Posted by RobS77
... the testator can stipulate that every pecuniary legacy is to pay its own proportion of IHT- and that includes charitable bequests.

wise_fool wrote: »

. I am interested in your statement:

The way I understand it, gifts to spouses, political parties, charities and other 'good causes' are exempt from IHT.

So if you want to make gifts to non exempt beneficiaries that are free of IHT - and thereby exempt beneficiaries receiving less - if we're not careful we can enter the realms of 'grossing up'.

That then produces the effect of slightly aggrieved charities but also more inheritance tax becoming due on the estate.

I think it is also important to all beneficiaries, especially charities, to make a

Memorandum of Appropriation


so the share of the asset(s) belong to the beneficiaries and they become responsible for Capital Gains Tax on any increase in value since the date of death ?