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Estate Administration problem , advice required

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  • doodling
    doodling Posts: 1,276 Forumite
    1,000 Posts Fourth Anniversary Name Dropper
    Hi,

    If your sister is the Administrator then she should be sorting this.  You have been very patient (very few people would have waited for 6 years!) but I think it is probably best if this is resolved ASAP.

    Offering you £80k based on the value at date of death is not how it should work unless you made some pretty clearly documented agreements with your sister that that would be the case.

    The starting point for a calculation will be (assuming that it is to be shared equally between you):

    (Current house value as determined by a RICS valuation)
      Minus (Capital gains tax to be paid)
      Minus (Any secured loans although these should already have been paid off by now)
      Divided by 2.

    So, based on your numbers, roughly speaking you are due:
    £300,000 (although that isn't a RICS valuation so it might move up or down from there)
      Minus (£300,000-£160,000) x 28% - £12,300 = £26,900
      Minus 0 (secured loans I assume)
      Divided by 2
      = £136,550.

    Note that I'm not an expert in capital gains tax so I might have got the calculation wrong, but it won't be an order of magnitude out.

    I haven't made any allowances for the improvement works that have been carried out - unless they are sufficiently significant to affect the sale price (many home improvements have more of an effect on saleability than sale price) or were done with your approval / encouragement then I don't see why they are anything to do with you.

    I also haven't made any allowances for the rent you have received from your sister's place - I'm not sure how that should be dealt with - part of me sees it as recompense for not having the use of £136k for 6 years and part of me thinks that you probably can't approach it like that and you may need to deduct it from the £136k you might be due.

    I would start with getting a solicitor's opinion on how much you are due.  Whatever happens you will need to employ a solicitor to either ensure that any agreement made is robust (you don't want to be in a position where your sister promises you an amount but then doesn't pay it for the next 6 years) or to pursue your entitlement in the event that you cannot agree so you might as well get their views now.

    You then need to discuss with your sister how she is going to find that money.  I'm surprised you say that she has no money - she sold a house two years ago - what happened to the money from that sale?  I expect that you might want to negotiate on the exact sum and you may be feeling generous towards your sister, but wherever your discussion takes you, I would tell her that whatever is negotiated is only provisionally agreed until formalised through your solicitor - that gives you the option of changing your mind once you have further legal advice behind you.  

    At the moment, you are in a position where the "do nothing" option is perfect for your sister but not for you - you need to make sure that this is settled ASAP, even if that bruises some feelings, rather than it hanging around for another 6 years.
  • Malthusian
    Malthusian Posts: 11,055 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    edited 30 June 2022 at 8:59AM
    There's no 12,300 allowance to deduct from the capital gains - that is only available for estates in the tax year the deceased dies and the following 2 tax years.
    Spilt milk now, but it is another reason not to faff about with settling estates.
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