ILN Today Post
March 11, 2019
The Hon’ble Supreme Court of India vide its judgment passed on February 28, 2019 in the case of The Regional Provident Fund Commissioner (II) West Bengal vs. Vivekananda Vidyamandir and Others (clubbed with certain other civil appeals) has re-affirmed the position concerning treatment of allowances for determining the provident fund contribution.
The common question of law which was raised by the appeals for determination by the Hon’ble Supreme Court was whether the special allowances paid by an establishment to its employees would fall within the ambit of the expression ‘basic wages’ under section 2(b)(ii) read with section 6 of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (“EPF Act”), for computation of deduction towards provident fund contribution.
January 17, 2019
Funds and financial products
ASIC releases consultation paper on fees and costs disclosure regime
On 8 January, ASIC released a consultation paper on reforms to the fees and costs disclosure requirements for managed investment schemes and superannuation funds.
January 28, 2018
The release of the proposed tax rules for the new corporate collective investment vehicle (CCIV) is a welcome development for fund managers considering the structuring options for future funds or future conversion of existing funds into CCIVs.
There is a certain familiarity with the proposed tax regime for CCIVs. Unsurprising, given the regime substantially imports and adopts the managed investment trust (MIT) and attribution MIT (AMIT) regimes.
December 5, 2017
Last week the Federal Government announced a Royal Commission in to banks big and small, wealth managers, superannuation funds and insurers. It is reported the commission would investigate previous cases of misconduct and whether they highlighted cultural or governance issues in the sector and among regulators.
May 18, 2017
How should a personal representative (PR) deal with a request from a beneficiary for an interim distribution before the estate is finalised? Estates can take many months to conclude but a beneficiary may be in need of some of their inheritance sooner. Can an executor help out without putting him or herself on the line?
Any PR (be they an executor of a Will or an administrator of an intestate estate) facing a request for an early distribution should consider their own position as well as the beneficiary’s. A PR owns a duty to the court, both to gather in the assets of the deceased and also to ensure that sufficient estate assets are retained to meet all liabilities and pay creditors. Not all liabilities may be evident at the time of death. Failure to retain sufficient funds to pay these may result in creditors pursuing the PR personally, so a PR must exercise caution in the face of such requests.
Unless the PR was very familiar with the deceased’s finances, or the beneficiaries can be entirely trusted to return estate assets if necessary, a PR should consider taking advantage of the protection offered by s.27 of the Trustee Act 1925 and advertise for creditors in the London Gazette (and elsewhere if appropriate, depending upon the deceased’s circumstances). Once the two month notice period has expired and if the PR has still received no notification of a claim prior to distribution, any creditor who appears after distribution has to pursue the recipient of the estate funds, rather than the PR.
Section 44 of the Administration of Estates Act 1925 provides that ‘a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death’. Accordingly PR’s cannot be forced to distribute sooner but could consider doing so if they are confident that all liabilities and creditors have been ascertained.
For deceased UK domiciliaries, PRs should be aware that claims under the Inheritance (Provision for Family and Dependents) Act 1975 can be issued up to 6 months after the Grant of Probate is itself issued and the claimant then has a further four months in which to serve the claim. Therefore 1975 Act claimants can appear up to ten months after the Grant has issued.
If an interim distribution is needed sooner, a PR should consider insisting on a form of indemnity from the beneficiary to confirm that, should a claim be made against the PR in connection with the estate, the beneficiary will indemnify the PR for that claim out of the funds distributed. The PR will need to consider whether that beneficiary will be good for the money if the indemnity needs to be relied upon. Ideally the PR will also obtain confirmation from the beneficiary that the beneficiary accepts the sums distributed at least in partial satisfaction of their interest in the estate. It may be appropriate to provide a set of draft estate accounts at this point.
Alternatively, depending upon the assets comprising the estate and their administrative powers, the PR may be able to offer to loan a beneficiary a portion of their share of the estate, in return for a suitable indemnity. This is likely to be more satisfactory for a PR, as the PR still retains ownership of the estate assets, albeit in the form of an IOU. The creditworthiness of the beneficiary will need to be considered once again.
Lay PRs, in particular, can often feel under pressure from family member beneficiaries to make early distributions. However, creditors need make no exceptions for lay PRs! The law allows PRs to protect themselves and a prudent PR will do just that.