Share of deceased parents House Sale

Lance

Hi

I wonder if anyone can advise me. Mother purchased house in early 80's with loan of £2500 from each of 2 of 3 children for deposit. Mother paid each child £6000 a few years ago in settlement of £2500 plus interest. Mother told me £6000 was full payment and the house would be divided equally after sale. After death the 2 children claim £2500 each amounts to 37% of equity in house and after £6000 payment leaves £12000 each owed. I do not believe anything was written down legally at time of loan. Does this sound right?

00ec25

very confusing post

since mother paid off the debt, how and why do the 2 children think they are still entitled to 37% of the property post death?

but since there is no proof either way then I scent expensive litigation to argue who is "right"

Guest101

00ec25 wrote: »

very confusing post

since mother paid off the debt, how and why do the 2 children think they are still entitled to 37% of the property post death?

Because their greedy! But if she settled the debt, they cannot claim now that the value is higher than when they agreed to settle

00ec25

Guest101 wrote: »

Because their greedy!

:mad: that would be they're as in: they are, not their, as in: they own

Mojisola

Did she leave a will?

Lance

Yes she left a will and my 2 sisters are executors. Had had more information: apparently when £6000 paid to each in 2006 they were unhappy and wanted £18000 each by mum hadn't the money and so declined. Nothing has ever been written down. The will has house and enough money to pay debt but money left equally to my one child and their 6 and house to be sold and monies divided equally between the 3 of us. Debt not mentioned to me until house sale complete and then they sent a list of payments including £12000 to each of them. Not mentioned at probate as would have complicated matters.

Strapped

I believe that residual beneficiaries (you) need to approve the estate's accounts before the estate is distributed - so you have a right to refuse to do so if you dispute the £12k each as a legitimate debt of the estate.

If they can't prove the debt then they're not entitled to it. But I smell an expensive lawsuit so it may be better to negotiate a compromise.

They'd also have to prove that the debt was against the house I think, as the estate has other money to be able to pay it off - definitely see a solicitor.

bowlhead99

This is why things should be written down, of course. If there is no legally documented ownership of the property in their favour, and the will does not say they get a priority share of the house proceeds, then that 24k paid to themselves should just get distributed to whomever is down in the will to get the residual proceeds of sale, which per your description means split 8:8:8 and not 12:12:0.

Just for a measure of balance though: if there is a general 'debt' outstanding (i.e. a cash loan amount plus interest), whether or not it was documented, then the executors can't simply ignore this if they are aware of it, and it would need to be settled out of the cash in the estate - perhaps out of the surplus cash given to the grandkids before needing to use the house proceeds, or perhaps proportionately from the general cash pot and the house proceeds pot; maybe the will would say which, and it's important given the grandkid split is different from the kid split.

Of course, the size of an undocumented debt to one or more of the executors is something of a conflict of interest - and if it was not included on the calculation of assets of the estate when applying for probate, they are on even dodgier grounds claiming it- a court would not look kindly on them pretending it didn't exist to simplify the forms when reporting to probate / inheritence tax.

As a side note though, if their £2500 investment was paid off at £6000 in 2006 after say 22 years, that equates to an interest rate of only about 4% p.a. . Bank base rate in early 1980s (say from mid 82 to mid 85) was in a range 9-13%. If they were asking to be paid back at whatever rate had been agreed back in the day, they might not be so unreasonable in asking for 18k in 2006 which on £2500 over 22 years is a bit over 9% and not a million miles away from what the mortgage rate would have been in the early days.

Of course, the prevailing mortgage rates were lower in later years, but still a lot higher than 4%. More likely they were seeing it as a share of the house ownership with similar gain figures in terms of house price appreciation. So their demands might not have been too outrageous. Just trying to see it from their perspective. And if the excess over £6,000 wasn't paid off back in 2006, you would hardly expect it to have reduced over the 7 years since.

But for all we know, any excess over £6k was disputed by the parent and with nothing documented they don't have a leg to stand on given that it could be proved from historic bank records that they lent 2.5k and got it back with interest on top, end of story.

Also presumably if they saying it's an interest-bearing loan, they will be paying income tax on the interest when they get it paid out. If it's ownership of a house they don't live in, it will attract capital gains tax at a lower rate of tax but without their name on the deeds they will find it difficult to explain to HMRC how they qualify for that treatment. It is certainly not a tax free gift if it was not shown as such in the will.

So, some things to think about and discuss with them and you can speak to a solicitor if you want, it would certainly cost under £8k, at least initially... Obviously taking them to court is not good for preserving the family relationships but presumably neither is them confiscating your £8k without any proof.

Bottom line, you could probably get something off them through the courts process and alienate them forever, and if you lose, also report them to HMRC for a bit of fun; but if you do the maths on the sums involved for the length of time involved, perhaps you can reconcile in your head that the sums they claim are not outrageous, but maybe there is room to negotiate something better.

It does not seem to be a matter of debate whether they helped your mother buy a house when it would have been impossible/more expensive for her to have done it without their support, and you didn't get financially involved in it yourself, so it stands to reason that they get a return on it unless you also gave your parent equivalent help in other ways.

They will have to act squeaky clean in their dealings with you if it were to ever go to court at some point, so make sure you get all the facts and deal with them calmly and reasonably, before you decide to try and get a payout from the court and cement the family rift forever.

Lance

Thanks Bowlhead99. A good point is the executors have 6 children, 3 each, and I have one so they obviously want to take the money from my share but can they decide to their families advantage where debts from the estate are paid? Before anyone points out my terrible behaviour in depriving the children it will be easier to get 8 grand and pay my child 4700 out of it and let them pay their kids than let them pay by kid 4700 and take 8000 off me. They have also submitted thousands in expences, painting house etc which I never saw as I live 150 miles away, including money to their teen kids to attend house and do whatever before sale.

ViolaLass

00ec25 wrote: »

:mad: that would be they're as in: they are, not their, as in: they own

Your sig says "I am not being paid to type so will not correct typos unless it reads double dutch".

ValHaller

Strapped wrote: »

I believe that residual beneficiaries (you) need to approve the estate's accounts before the estate is distributed - so you have a right to refuse to do so if you dispute the £12k each as a legitimate debt of the estate.

If they can't prove the debt then they're not entitled to it. But I smell an expensive lawsuit so it may be better to negotiate a compromise.

They'd also have to prove that the debt was against the house I think, as the estate has other money to be able to pay it off - definitely see a solicitor.

To me the way the executors have done this looks so amateur that they would be quickly put straight. Probably a stern letter from a solicitor would make them back down, because honestly this a complete try on. I think if they had tried it on out of the kids' share they might have got away with it.

I agree, see a solicitor armed with a copy of the will and the Estate Accounts.