SQE1 sample questions

Question 45

A firm of solicitors is acting on behalf of the executors of a will. The administration of the estate will be completed shortly and the executors have asked the firm to pay the legacies due under the will.

As a separate matter the firm also acts for one of the beneficiaries of the will in connection with the beneficiary’s purchase of a property. The beneficiary is entitled to a legacy of £20,000 from the will. The beneficiary gives written instructions to the firm to use this £20,000 legacy to repay the £2,000 the firm has already incurred in surveyor’s fees and searches (for which the firm has billed the beneficiary) and retain the balance of £18,000 and use it as part of the purchase price.

Which of the following statements best explains the action the firm should take?

A. The firm cannot transfer the funds from the executors’ client account ledger to the beneficiary’s client account ledger. The firm should send a cheque to the beneficiary for £20,000.

B. The firm can transfer £2,000 from the executors’ client account ledger to the firm’s business bank account and should then send a cheque for £18,000 to the beneficiary.

C. The firm can transfer £2,000 from the executors’ client account ledger to the firm’s business bank account and should then transfer £18,000 to the beneficiary’s stakeholder account ledger.

D. The firm can transfer £20,000 from the executors’ client account ledger to the beneficiary’s client account ledger and should then transfer £2,000 to the firm’s business bank account.

E. The firm can transfer £20,000 from the executors’ client account ledger to the beneficiary’s client account ledger. The firm should not transfer £2,000 to the firm’s business bank account until the purchase of the property is completed.