Deed of Appropriation - transfer of ownership, cost and delay?

Keep_pedalling

tigermark119 said:

Hi. I’ve just joined the forum as I’m in need of some advice on Deeds Of Appropriation- and read the very interesting threads above. My situation is similar: I’m an Executor to my Father’s Estate; house valued at £450,000 in July for Probate; on the market 10 days and we have a buyer, who has offered £501,500. So a definite CGT issue if the sale goes through. Myself and my two Brothers are the Beneficiaries. For the record, there is a very, very bad relationship with one of the Brothers ( as he was not chosen as an Executor). My initial question is: what are the legal drawbacks of a Deed Of Appropriation? 

Thank you. 

I don’t think there are any drawbacks to making one although it may be difficult to do so with an uncooperative beneficiary involved.

Is the estate in or close to IHT territory? How was the valuation obtained?

itm2

Having paid a solicitor #300 to create one for me last year, and seeing how trivial it is, I'd strongly recommend that you ask ChatGPT or Bard to draft one for you. I tried it afterwards and it did at least a good a job as the solicitor!

tigermark119

Thank you Sue. The Will is a straight split between 3 beneficiaries. The thinking behind this was to try and reduce the amount of CGT to be paid. However, I’m even more confused now as, from a subsequent post which I put earlier today, it would appear that if the property is not owned by the Beneficiaries ( it ls in my late Father’s name), we cannot be taxed for a gain on something we don’t legally own. I am selling it to carry out his wishes of the will. Any thoughts?

tigermark119

Keep_pedalling said:

tigermark119 said:

Hi. I’ve just joined the forum as I’m in need of some advice on Deeds Of Appropriation- and read the very interesting threads above. My situation is similar: I’m an Executor to my Father’s Estate; house valued at £450,000 in July for Probate; on the market 10 days and we have a buyer, who has offered £501,500. So a definite CGT issue if the sale goes through. Myself and my two Brothers are the Beneficiaries. For the record, there is a very, very bad relationship with one of the Brothers ( as he was not chosen as an Executor). My initial question is: what are the legal drawbacks of a Deed Of Appropriation? 

Thank you. 

I don’t think there are any drawbacks to making one although it may be difficult to do so with an uncooperative beneficiary involved.

Is the estate in or close to IHT territory? How was the valuation obtained?

Thank you. It’s just under IHT territory as I have applied to transfer the unused nil rate band from my late Mother, who passed in 2017. This gives me a threshold of £650k. Three independent valuations were obtained from Estate Agents. As I mentioned, I think on a different thread (still getting used to this forum!!), I’m not sure now that CGT applies as the house was owned by my Father and is in his name- I or the other beneficiaries don’t legally own it. 

poppystar

tigermark119 said:

Keep_pedalling said:

tigermark119 said:

Hi. I’ve just joined the forum as I’m in need of some advice on Deeds Of Appropriation- and read the very interesting threads above. My situation is similar: I’m an Executor to my Father’s Estate; house valued at £450,000 in July for Probate; on the market 10 days and we have a buyer, who has offered £501,500. So a definite CGT issue if the sale goes through. Myself and my two Brothers are the Beneficiaries. For the record, there is a very, very bad relationship with one of the Brothers ( as he was not chosen as an Executor). My initial question is: what are the legal drawbacks of a Deed Of Appropriation? 

Thank you. 

I don’t think there are any drawbacks to making one although it may be difficult to do so with an uncooperative beneficiary involved.

Is the estate in or close to IHT territory? How was the valuation obtained?

Thank you. It’s just under IHT territory as I have applied to transfer the unused nil rate band from my late Mother, who passed in 2017. This gives me a threshold of £650k. Three independent valuations were obtained from Estate Agents. As I mentioned, I think on a different thread (still getting used to this forum!!), I’m not sure now that CGT applies as the house was owned by my Father and is in his name- I or the other beneficiaries don’t legally own it. 

But the estate does - so the estate will be liable for CGT on any increase in value. The estate only has one allowance to offset against this. AIUI the deed of appropriation would allow you each to offset your share of the gain against each of your CGT allowances for the year. Only you can know if it is worth it to do that especially if not all beneficiaries are happy with it. 

Marcon

poppystar said:

tigermark119 said:

Keep_pedalling said:

tigermark119 said:

Hi. I’ve just joined the forum as I’m in need of some advice on Deeds Of Appropriation- and read the very interesting threads above. My situation is similar: I’m an Executor to my Father’s Estate; house valued at £450,000 in July for Probate; on the market 10 days and we have a buyer, who has offered £501,500. So a definite CGT issue if the sale goes through. Myself and my two Brothers are the Beneficiaries. For the record, there is a very, very bad relationship with one of the Brothers ( as he was not chosen as an Executor). My initial question is: what are the legal drawbacks of a Deed Of Appropriation? 

Thank you. 

I don’t think there are any drawbacks to making one although it may be difficult to do so with an uncooperative beneficiary involved.

Is the estate in or close to IHT territory? How was the valuation obtained?

Thank you. It’s just under IHT territory as I have applied to transfer the unused nil rate band from my late Mother, who passed in 2017. This gives me a threshold of £650k. Three independent valuations were obtained from Estate Agents. As I mentioned, I think on a different thread (still getting used to this forum!!), I’m not sure now that CGT applies as the house was owned by my Father and is in his name- I or the other beneficiaries don’t legally own it. 

But the estate does - so the estate will be liable for CGT on any increase in value. The estate only has one allowance to offset against this. AIUI the deed of appropriation would allow you each to offset your share of the gain against each of your CGT allowances for the year. Only you can know if it is worth it to do that especially if not all beneficiaries are happy with it. 

Nice neat explanation here if anyone is still slightly bemused: https://www.wansbroughs.com/news-events/when-is-a-deed-of-appropriation-appropriate/