If you are dealing with the estate of someone who has died, you may need to sell their property. We take a look at the probate and sale process and whether as an executor you can accept a low offer on probate property.
At Lockings Solicitors, we represent executors and administrators in dealing with estate administration, including probate property sales. As well as extensive experience in the sector, we are also known for the high level of service we provide.
We offer a free initial chat to enable you to ask us about the probate and conveyancing processes as well as any other questions you may have.
Selling a property after someone’s death can seem daunting. There is a lengthy legal process to go through as well as the emotional difficulty of clearing a loved one’s home. You will not have to clear the property straightaway, however, as there are several steps to go through before the property is placed on the market.
As an executor, you will need a Grant of Probate to enable you to sell a property. If the deceased did not leave a Will, then someone entitled to deal with the estate, known as an administrator, will need to apply for a Grant of Letters of Administration. The grant is the legal document giving authority to the executor or administrator to deal with the estate, to include selling property.
The first step in an estate administration is to value the deceased’s assets and liabilities. This will establish whether Inheritance Tax is payable. All assets need to be valued. Property can be valued by an estate agent or chartered surveyor or by looking at the amount similar properties have been sold for.
You will also need to ask other asset holders, such as share trustees and account holders, for valuations of the estate’s other assets as at the date of death. You will need to send them a copy of the death certificate as well as details of the deceased’s holding with them.
Valuable items such as cars, jewellery and furniture should also be valued. Individual items worth more than £1,500 can be valued professionally if you wish. Lower value items can be estimated by looking at the cost of similar items.
It is necessary to find out whether the deceased gave any valuable gifts during the last seven years of their life, as Inheritance Tax could be payable on these.
You also need to obtain figures for any money owed by the estate. This could be by way of a mortgage, tax owed to HMRC or credit card balances. The total liabilities can be subtracted from the total assets to give the value of the net estate.
Once you have this, you can calculate whether Inheritance Tax is payable and, if so, how much is due. This can be a complicated calculation, particularly if the deceased gave gifts that need to be taken into account. It is important to make sure no mistakes are made as executors and administrators can be personally liable for errors which cause loss to an estate. If you need help establishing how much is due, we can assist you.
There are exemptions available in respect of Inheritance Tax and as the executor or beneficiary, you will need to make sure that you take advantage of these.
Inheritance Tax needs to be paid before a grant can be applied for. A main form needs to be completed along with a schedule for each type of asset and liability. These are sent to HMRC together with the payment. It is usually possible to ask the deceased’s bank or building society to pay Inheritance Tax if sufficient funds are held. A National Savings & Investment holding can also be used.
If most of the deceased’s funds were tied up in property, HMRC will usually agree to payment in instalments. Inheritance Tax, or the first instalment, must be paid by the end of the sixth month after the date of death.
An application for a Grant of Probate or a Grant of Letters of Administration can be sent to the Probate Registry around two weeks after Inheritance Tax has been paid. This gives HMRC a chance to process the payment and confirm to the Registry that is has been received.
The Probate Registry regularly take several months to process an application, depending on their backlog. It is not possible to complete a sale until a grant has been issued but it is possible to get things ready in the meantime. Because of delays at the Probate Registry, we recommend considering waiting to agree a sale until the grant is received to reduce the risk of the transaction being derailed by matters outside of your/our control. If you agree to a sale, your buyer must be clear that no completion can occur until the grant is received.
Once the property is being marketed, you will need to consider the offers that are received and decide whether to accept them. As an executor or administrator, you have a duty to act in the best interests of the beneficiaries at all times. This means that you should take care to achieve the best price for assets that are sold, including the deceased’s property. You cannot sell the property at an undervalue.
You therefore need to carefully consider whether to accept a low offer on probate property. If it is made after the property has only been on the market for a short time, you should consider waiting longer to try and obtain a better offer. You will need to be able to show the beneficiaries that you have taken steps to try and maximise the value of the estate.
Where a property has failed to sell, you could discuss the situation with the estate agent and think about whether to move to a different agency or whether anything else could be done to help the sale. You are advised to take legal advice before accepting an offer that is below the value included in the Inheritance Tax calculations or below the expected market value.
The probate process can be complex and is generally time-consuming. If you decide that you would like us to deal with an estate administration on your behalf, we would be pleased to represent you. We can advise you on issues such as paying Inheritance Tax and selling property as well as applying for the Grant of Probate or Grant of Letters of Administration.
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