Can you pay instead of selling assets to cover debt?

xylophone

Dad dies and i  his will leaves two fields that he owned to his two children who are also exors of his will. Let's say the value of the fields is £160,000.
However, he owed the bank £80,000.

The children have a choice - either they sell the fields, repay the bank and split the cash left over or they opt to repay from their own resources.

If only one of them makes the repayment then ownership of the fields is split accordingly.

Resurrect

Cheers Xylophone! 

Our situation as I understand it so far:

Property value c£800k.
No mortgage or bank debt.
No IHT as agricultural. 

Expected debt say £80k.
Solicitors fees say £20k.

Need to make up c£100k. By the time probate is nearer to being sorted I will know exact figure and can put in the money (I have this to put in if necessary) or come to an agreement / get a loan with the other executor & beneficiary.

Preference would be to keep land and agree on future use of it and income from it.

All of this would be agreed with the solicitor that we appoint. 

Brynsam

You say 'property value' - is the whole £800K fields, or is there a house involved? If so, is it part of a working farm?

Resurrect

Brynsam said:

You say 'property value' - is the whole £800K fields, or is there a house involved? If so, is it part of a working farm?

Thanks Brynsam - yes small working farm. With house, farm buildings & fields. 

House has agricultural tie. 

We could sell fields if we have to but would rather not. 

getmore4less

What you want to do happens all the time when there is a house with a mortgage. 

You buy out the debt in the estate and inherit the assets. 

Often done by the people inheriting the assets using a mortgage as that tends to be the cheapest way to borrow. 
As the assets exceed the debts you just need to pay off the debts. 

It is when the debts exceed assets it gets a bit more complicated as the valuations(amount paid) need to be market or more. 

If you have the cash then you have a solution. 

With just 2 beneficiary it should not be too hard to come to an agreement or working solution that allows the farm to be kept and you get you money back and share of the estate. 

getmore4less

If there are no complications £20k is a high amount for solicitors.

Even with agricultural exemptions you should be able to do most of the work yourselves, employing solicitors for advice and guidance. 
Negotiate the cost if you want them to do more. 

Resurrect

Thank you so much GM4L. 

Your last posts are a massive weight off of my mind.

I have used the £80k & £20k as worst case as I don’t know what either will be.

Good news we could get a mortgage against it when we get a figure to work with.

This forum / website is a wonderful resource isn’t it?! 

Thanks again