Transfer of ownership for SOME of properties in the estate - is it possible?

Blox55

My mother-in-law estate consists of money in the bank, her main house, investment flat in UK and an a share of the investment flat abroad. The estate will be subject to inheritance tax.  There was no will and we are administrators of the estate.  I have a few questions.

1. Is it possible to do a transfer of ownership for the share of ownership of the property abroad, but sell the property in UK by the administrators? I.e. not doing the same for all property?
   
   
2. If so, it may take some time for the house to be sold, does this mean that beneficiaries have to wait for the UK property to be sold before distributing remainder of cash and before transferring the share of the property abroad?

I know that the UK property can also be transferred to beneficiaries and then subsequently sold, but this would mean that should the property be overvalued, the overpaid IHT cannot be claimed back. The IHT can only be claimed back if it is the estate (i.e. administrator) who sells the property. This is the main reason for the question as we are getting such varied valuations that if we take one end, we could be paying too much on IHT, but if we take the other end, then we could be subject to penalties by HMRC.

Marcon

Blox55 said:

My mother-in-law estate consists of money in the bank, her main house, investment flat in UK and an a share of the investment flat abroad. The estate will be subject to inheritance tax.  There was no will and we are administrators of the estate.  I have a few questions.

1. Is it possible to do a transfer of ownership for the share of ownership of the property abroad, but sell the property in UK by the administrators? I.e. not doing the same for all property?
   
   
2. If so, it may take some time for the house to be sold, does this mean that beneficiaries have to wait for the UK property to be sold before distributing remainder of cash and before transferring the share of the property abroad?

I know that the UK property can also be transferred to beneficiaries and then subsequently sold, but this would mean that should the property be overvalued, the overpaid IHT cannot be claimed back. The IHT can only be claimed back if it is the estate (i.e. administrator) who sells the property. This is the main reason for the question as we are getting such varied valuations that if we take one end, we could be paying too much on IHT, but if we take the other end, then we could be subject to penalties by HMRC.

1. Yes. Up to the administrators how they handle things.
2. Again, this is a decision for the administrators - within reason. Ideally you need to keep the beneficiaries informed and give them realistic timescales, explaining the reasons for any delay if you sense they're becoming restive!

Blox55

Thank you very much!

Keep_pedalling

I would be careful of transferring any of the properties to the beneficiaries as that could lead to major issues between them. What happens os some want to sell their share but others don’t. Far cleaner to sell them all and distribute as cash unless all of them are happy to be joint owners and landlords.

Blox55

Keep_pedalling said:

I would be careful of transferring any of the properties to the beneficiaries as that could lead to major issues between them. What happens os some want to sell their share but others don’t. Far cleaner to sell them all and distribute as cash unless all of them are happy to be joint owners and landlords.

Agree in normal circumstances, which is why we want UK property not to be transferred to beneficiaries.

The transfer would be for the share of the foreign property where a third party is already owning the share of this asset and therefore it is not in our control to sell it. Hence we are not introducing a new situation.

Keep_pedalling

Blox55 said:

Keep_pedalling said:

I would be careful of transferring any of the properties to the beneficiaries as that could lead to major issues between them. What happens os some want to sell their share but others don’t. Far cleaner to sell them all and distribute as cash unless all of them are happy to be joint owners and landlords.

Agree in normal circumstances, which is why we want UK property not to be transferred to beneficiaries.

The transfer would be for the share of the foreign property where a third party is already owning the share of this asset and therefore it is not in our control to sell it. Hence we are not introducing a new situation.

Would that party consider buying out the share from the estate? I don’t think I would want to inherit a share in a property under those circumstances it would just lumber me with an asset I would not benefit from with a potential issue of passing on the problem to the next generation.

How have you valued this property for IHT purposes?

Blox55

The beneficiaries are happy to have the share of the foreign property transferred, they undersrand all potential issues. I just wanted to know whether this would force UK property being transferred too or not, glad to hear it would not :-)

Marcon

Blox55 said:

The beneficiaries are happy to have the share of the foreign property transferred, they undersrand all potential issues. I just wanted to know whether this would force UK property being transferred too or not, glad to hear it would not :-)

I wonder why you thought it might? Presumably there is no link between the properties in the UK, and the share of ownership of the one overseas...?

Blox55

I just did not know when you elect what to do whether you need to elect per property or you get only one for all properties. Now thinking about it, it makes common sense it is done on property by property basis. 

So thank to all people who replied, last months were stressful and my mind is not working as it should!