WAE: Intestacy Rules

Question 1

What is a post-death arrangement?

Answer 1

A change to the distribution of an estate after death by variation, disclaimer, precatory trust, court order under IPFDA 1975, or capital distribution from wills trusts.

Question 2

What is a variation of a will gift?

Answer 2

A written direction by a beneficiary to personal representatives to transfer all or part of their inheritance to someone else.

Question 3

Within what period must a variation be made to obtain IHT ‘writing-back’?

Answer 3

Within two years of the deceased’s death.

Question 4

Which IHTA section governs the IHT ‘writing-back’ effect on variations?

Answer 4

Section 142 of the Inheritance Tax Act 1984.

Question 5

What four conditions must a variation satisfy for IHT ‘writing-back’?

Answer 5

Be in writing; made within two years of death; include express s142 election; not for consideration.

Question 6

What is the tax effect of a valid variation under IHT rules?

Answer 6

The gift is treated as made by the deceased at death, not by the beneficiary, so no PET arises.

Question 7

Can personal representatives refuse to sign a variation?

Answer 7

Only if estate assets are insufficient to discharge any additional IHT triggered by the variation.

Question 8

What triggers a CGT liability on a beneficiary gift?

Answer 8

Disposal of a non-cash asset that has risen in value above the beneficiary’s annual exempt amount.

Question 9

Which TCGA provision mirrors IHT ‘writing-back’ for CGT?

Answer 9

Section 62 of the Taxation of Chargeable Gains Act 1992.

Question 10

What conditions apply for s62 TCGA ‘writing-back’?

Answer 10

Same as s142 IHTA: in writing, within two years, express election, no consideration.

Question 11

What is a disclaimer?

Answer 11

An absolute refusal by a beneficiary, before acceptance, to take their whole testamentary or intestate share.

Question 12

Can a beneficiary partially disclaim their inheritance?

Answer 12

No—only the entire gift may be disclaimed, and disclaiming a will gift does not disclaim intestacy share.

Question 13

How does a disclaimer affect IHT/CGT?

Answer 13

If within two years and elective, the gift is treated for tax as if made by the deceased at death.

Question 14

What is a precatory trust?

Answer 14

A will gift accompanied by a non-binding wish that the beneficiary pass assets on according to the testator’s letter of wishes.

Question 15

Are beneficiaries legally bound by a precatory trust?

Answer 15

No—there is no legal obligation, although distributions made within two years carry s143 IHTA ‘writing-back.’

Question 16

Which IHTA section automatically treats precatory trust distributions as if made by the deceased?

Answer 16

Section 143 IHTA, provided they occur within two years.

Question 17

Is there a CGT ‘writing-back’ for precatory trust distributions?

Answer 17

No—distributions are treated as disposals by the beneficiary for CGT purposes.

Question 18

What is a PET?

Answer 18

A Potentially Exempt Transfer, a lifetime gift that becomes chargeable if the donor dies within seven years.

Question 19

How is the deceased’s domicile relevant under IPFDA 1975?

Answer 19

The Act only applies if the deceased was domiciled in England and Wales at death.

Question 20

Name the four categories of domicile.

Answer 20

Domicile of origin, domicile of dependency, domicile of choice, and forced domicile.

Question 21

Who may apply under IPFDA 1975?

Answer 21

Spouse/civil partner, former spouse under s14, cohabitee ≥2 years, child (including treated-as), or someone maintained by the deceased.

Question 22

What is the time limit for IPFDA 1975 claims?

Answer 22

Six months from date of grant of representation (or any extension granted by court).

Question 23

Under IPFDA 1975, what does ‘reasonable financial provision’ depend on?

Answer 23

The applicant’s relationship to the deceased—spouse standard or maintenance standard.

Question 24

What is the spouse standard under IPFDA 1975?

Answer 24

‘Such financial provision as it would be reasonable for a spouse or civil partner to receive,’ irrespective of need.

Question 25

What is the maintenance standard under IPFDA 1975?

Answer 25

‘Such financial provision as it would be reasonable for the applicant to receive for maintenance.’

Question 26

When can the spouse standard be extended to former spouses?

Answer 26

If divorced/dissolved/judicially separated within 12 months of death, not remarried, and no ancillary award made.

Question 27

List three common factors the court must consider under s3 IPFDA 1975.

Answer 27

Applicant’s needs/resources; beneficiary’s needs/resources; deceased’s obligations; net estate size; disabilities; conduct; any other matter.

Question 28

Give one spouse-specific factor under s3 IPFDA 1975.

Answer 28

Length of marriage or contribution to the family (including home-making/childcare).

Question 29

Give one child-specific factor under s3 IPFDA 1975.

Answer 29

Manner and expected provision for education or training.

Question 30

What power does s2(1) IPFDA 1975 give to the court?

Answer 30

To order periodical payments, lump sums, transfers or settlements of property, among others.

Question 31

Can IPFDA 1975 orders take effect from date of death for tax purposes?

Answer 31

Yes—orders are ‘read back’ to date of death for IHT and CGT.

Question 32

Who qualifies as issue under the intestacy rules?

Answer 32

Children and remoter lineal descendants (including adopted, legitimated, and conceived but unborn).

Question 33

When does the intestacy regime apply?

Answer 33

Where a person dies without a valid will or a will fails to dispose of some of their estate.

Question 34

What is ‘personal chattels’ under intestacy?

Answer 34

Tangible movable property, excluding money, business assets, and pure investments.

Question 35

How long must a spouse survive the intestate to take under the rules?

Answer 35

28 days from the intestate’s death (s462A AEA 1925).

Question 36

What share does a spouse receive if intestate died leaving spouse and issue?

Answer 36

Personal chattels; £322,000 statutory legacy; and half the residue.

Question 37

How is residue calculated on intestacy?

Answer 37

Net estate minus personal chattels and statutory legacy, then divided per rules.

Question 38

How is issue entitled on intestacy when a spouse survives?

Answer 38

They share the other half of residue equally on statutory trusts.

Question 39

What are the two limbs of the statutory trusts for issue?

Answer 39

Contingency: survive & reach age 18 to vest; substitution: issue of predeceased children take their parent’s share.

Question 40

What happens if an intestate leaves no spouse or issue?

Answer 40

Estate passes in priority: parents; whole-blood siblings; half-blood siblings; grandparents; whole-blood uncles/aunts; half-blood uncles/aunts; then crown.

Question 41

Can a surviving spouse appropriate the marital home on intestacy?

Answer 41

Yes, within 12 months of grant, in satisfaction of their entitlement under Schedule 2 Intestate Estates Act 1952.

Question 42

What must the spouse pay when appropriating the home if value exceeds their entitlement?

Answer 42

The difference in cash from their personal funds, based on the home’s value at appropriation.

Question 43

What restriction exists on appropriating the home?

Answer 43

Court consent is required if house is multi-unit or part of a business premises.

Question 44

What does it mean to ‘appropriate’ an asset on intestacy?

Answer 44

Personal representatives assign that asset in lieu of cash entitlement under intestacy rules.

Question 45

What happens if an intestacy beneficiary dies before the intestate?

Answer 45

Their share passes to their issue under substitution limb if they satisfy the contingency.

Question 46

What is bona vacantia?

Answer 46

Property of an intestate with no surviving relatives passes to the Crown as ownerless goods.

Question 47

Can an IPFDA applicant in the 'maintained by deceased' category include emotional support only?

Answer 47

No—the deceased must have made a substantial financial (money or money’s worth) contribution.

Question 48

What is the effect of court anti-avoidance powers under IPFDA 1975?

Answer 48

Court can include in net estate dispositions made during life to frustrate claims.

Question 49

What is the ‘statutory legacy’ in intestacy?

Answer 49

The fixed cash sum (£322,000) payable to a surviving spouse or civil partner before residue division.

Question 50

What happens to personal chattels on intestacy?

Answer 50

They pass absolutely to the surviving spouse or civil partner before the statutory legacy and residue calculations.

Question 51

What happens if a disclaimer is not made before acceptance?

Answer 51

The beneficiary becomes absolutely entitled and cannot later disclaim to trigger tax-beneficial treatment.

Question 52

Why are variations generally preferred to disclaimers?

Answer 52

Variations allow partial gifts, more flexibility, and satisfy tax 'writing-back'; disclaimers must be whole and pre-acceptance.