How much power does an Executor have?

John_Pierpoint

I have been the executor for 4 family estates and have, with the help of fellow posters on MSE, completed an estate similar to yours - so I too have come up against your problems. [Tag: uncle "Mr Dog"]

Can we assume that the estate is in "England and Wales" ?

"Hell is other people".

You can choose your friends, you can even divorce your spouse, but you are stuck with your relatives.

It is very difficult emotionally when a beneficiary/relative tries to pull rank on you or kicks off about the decisions you are making. Two things for sure are:
You cannot please all the people all the time.
20/20 hindsight will demonstrate that you made mistakes.

Has probate been granted? [It appears from your initial posting that hurdle has been overcome] Have you advertised for creditors? So assuming that has been done too you are now completely the boss.

The deceased realised that you were the trustworthy level headed one, so legally you make the decisions and if necessarily can tell the others where to go.

Your job as a trustee and executor is to treat all fairly and get the maximum amount possible for the estate. Have you identified all the beneficiaries - a lot of people make a will failing to realise that HMRC Capital Taxes Office will be the number one beneficiary at the front of the queue. Is the estate paying InHeritance Tax (IHT) ?

How much money have you got on hand now in the executors account? You could make a stage payment to all beneficiaries if there is plenty of money BUT don't leave yourself or your personal credit exposed. That payment could oil the wheels for beneficiaries trying to rearrange their finances.

Personally I would set a short period for the chaotic trouble maker " to put up or shut up". Warn her that any further expenses incurred by the estate as a result of her intervention will be deducted from her share.
Bearing in mind that we are talking about family - I would be prepared to co-operate with her attempts to persuade some or all of the other beneficiaries to join in the DOV wangle they are proposing; but the (say) £500+ cost would be their expense payable up front. I would suggest that you post the aim of the DOV (not all dozen pages of it) here so we can try to understand how someone without enough money can come to own all of a house.
Obviously selling to a beneficiary will save an appreciable sum in estate agent charges, however remember that the other beneficiaries, especially HMRC will expect you to demonstrate that you have achieved the best net market price. Have you got clearance from the Valuation Office Agency (VOA) - formerly "District Valuer"?

Any beneficiary can within two years of the death, create a deed of variation for their share alone; however HMRC won't be messed about the way you have been, if tax is involved - the estate will be allowed one bite at the cherry.

How do you stand over Capital Gains Tax (CGT) as far as the sale of the house goes? If you are already paying IHT and you make a loss under the probate valuation, you can reclaim some of the 40% tax - likewise if you make a profit you might be liable for CGT or IHT depending on the stage of the administration of the estate. Play your cards right and you won't pay any more of either.

[Just to confuse you a bit more: only 4 people can legally own the plot of land with the house on it, at the moment you legally own it and it will be you that assents it to a family member for no money ?!? Well I suppose you could assent it to 4 beneficiaries and they then individually assent it to the one female, thus getting you out of the loop of blame if it all goes wrong financially. ]

If you need more guidance on the tax situation, put a posting on the "Saving Tax" part of this forum and see if you can get a member called "jimmo" to comment.

Totally_fedup

Wow JP that makes interesting reading--yes it is in England and Wales, we do have Estate Agent fees as it went on the market before she made an actual offer, no there is no IHT, solicitor also assured me there would be no CGT,yes I believe I have/will get the best possible price for it, although we both know that a person can make aDOV for their share this turns out to have to be a DOV between All the Beneficiares as she needs the DOV to grant them the house in her and husbands name, as he can't be on the Assent which is signed by her and me, to be able to actually get the mortgage for the purchase of the house. I have virtually nothing in the Executor account and am personally owed a considerable amount as there was no money to pay the funeral or any subsequent expenses.
So it all turns out is has all been because they weren't honest up front and needed to get a mortgage of which the mortgage company of course want to see his name on the house paperwork.
So the Will gets changed in effect giving her the house by mother and the rest of us a gift of the one sixth share each.
Yes there is money changing hands as she is paying for the house but technically not just giving us the gift!!
Anyway paperwork is ongoing and I will keep the forum up todate incase it can be of use to anyone in the future.

John_Pierpoint

If I understand this correctly, 5 beneficiaries are giving 5/6ths of the house at probate value to sister in exchange for post dated cheques?
If the cheques bounce then the gang of five will petition for the bankruptcy of the sister? [In the hope that the house is still worth more or less what the sister agreed as its value.]

Has sister and her partner offered the rest of you a print out of their[3 x 2]credit files, as they seem unable to raise finance by conventional means?

Mortgage companies have become very wary about becoming mortgagees on property that has changed hands within the last 6 months. I don't know if this is a reaction to buy to let landlords, who were building portfolios hand over fist in the boom years or to being caught by fraud in the registration system or fraud in the surveying/valuation system. Is the solicitor helping get the mortgage?

As there is no IHT and the agreed (?) valuation for probate has been used, the really tough minded beneficiary HMRC will not be involved.
I don't know what the house is worth but the five of you may get the transaction queried by the money laundering regulations [My son aged 18 fell under suspicion when he inherited a chunk of money from the estate of this great grand mother and in my daughter's case there was some dark mutterings from her solicitor.]

I know that this is a crude way of explaining the situation, presumably you are arranging for the solicitor to hold the ring as this transaction is not really anything to do with the role of the executor; it is something the beneficiaries have dreamt up themselves. Are there any under 18 beneficiaries (eg a beneficiary in the blood line has died thus creating an under age orphan for their 1/6 th share.)
The DOV could be an opportunity to pass a benefit to someone not named on the will.

Turning to the Estate Agent - why do you need to pay his fees. With my estates I was very careful to insist that I could sell privately if that was more beneficial to the beneficiaries. In other words "If you want your commission earn it", as I feel that some estate agents consider an executors sale as easy double money (A commission for selling a tired elderly persons home and then another commission when their favourite developer has tarted it up and realises any "permitted development" gains).
Is sister getting this house cheap or did you sign some sort of "sole selling rights" deal with the estate agent?

On the subject of legal costs, I paid out a bit less than £550 in "legals" for selling an unregistered £350K house. There was a bit of to and fro-ing because of legal problems with the buyer's sale and some difficulty involving the solicitor's on-line system for checking me as a real person. It did not recognise me!

Good luck,

John.

http://www.parmentierarthur.co.uk/pdf/april09article.pdf

here are the "professionals" arguing amongst themselves about unforeseen effects of "changing" wills. You can always join in the fun when you become expert in deeds of variation.

http://www.accountingweb.co.uk/anyanswers/deed-variation/473339

Totally_fedup

Oh believe me this is not 'something the Beneficiares have dreamed up for themselves--- this is a fact of law that can be done and has been very carefully checked out by Executors solicitor.
No post dated cheques are being handed out--full amount of sale to to Executors Solicitors who then issue a cheque to the Executors of-- Account and Executor pays the 4 Beneficiaries still in the mix as one is getting the house and one is lending her share to enable her to get the house.
We are still waiting for her solicitor to send draft DOV for amendment.
Times goes on!!!

John_Pierpoint

I was trying to get you to divorce yourself in your mind from your three legal identities.
1. You are an individual with all those individual financial problems that we individuals have. Really the only relevant ones are your credit rating as your bankruptcy would turn you into the living dead.
You are a beneficiary, here your age and sanity could be an issue. - this legal identity does not have many rights - but a beneficiary does have the right to demand a set of accounts and interest on the payment of a specific annuity if not paid within 12 months (ie I leave my niece £10,000........) and you have the right to redirect your share of the estate or the proceeds of its sale to some other destination, within 24 months, as though the testator had made that change to the will before death. (Fortunately HMRC is not getting involved as the over powerful beneficiary as this is an "excepted estate"). This instrument of variation power is available for your share only but you are ganging up with the other 6 beneficiaries to radically rewrite the will. You could refuse to join the gang and demand to be paid out ASAP. Obviously such behaviour would not endear you to the other 5.
Thirdly, you are "the executor" from the moment of death but until you have provided an account and sworn your position you are not allowed to liquidate and distribute in accordance with the will. An executor, is a trustee of a special situation. Here your attributes of age/sanity/financial standing/country of abode/criminal record could be grounds for challenging your position.
The trust, with its own tax rules, that can exist for a couple of whole tax years, following the death. As a trustee you are required to maximise the benefit, in a prudent way for all the beneficiaries and this responsibility overrides you obligations to the first of your legal identities.
As a lay person you are only allowed to claim expenses directly related to your duties, you are not allowed to charge for your time.

Personally I would write to the six beneficiaries saying that the administration of the estate has now been completed and pay yourself all your expenses. Then tell them that you are holding the land as their bare trustee and will they individually tell you what they want to do with it.
That way you cease to be the executor and you settle the outstanding account with the solicitor.

Now you start again as equal beneficiaries of a bare trust and in the DOV (costing 500 - 1,000 quid) you spell out exactly who gets what and when.
Then everyone knows what they are doing, what it is costing, who is paying and when it will be over. It is called a deed complete with witnessed signatures, because there is an increased risk of the parties involved falling out and wanting to change their minds with the benefit of 20:20 hindsight.

This is a time when you can all blame the solicitor, if you have one.:D

So which hat are you wearing today?

John

PS Are there two solicitors involved in this DOV proposal in case of conflict of interests?

Totally_fedup

I can't divorce myself from it and leave 4 of the others to her mercy!

I don't have enough money to either pay myself out of the estate ot the solicitor--the house is the estate.

Yes there are two solicitors--hers for her and hubby and ours acting for me but in effect the 4 of us.

I am not at ease with it but have been told by the solicitor that we need to do it so that her mortgage can be got to settle the purchase of the house so that we can all get our money and settle the bills.
Fortunately all util;ities have so far been very understanding.

John_Pierpoint