How to deal with distribution of estate - including re-imbursement of costs 6 October 2022 at 10:07AM in Deaths, funerals & probate 5 replies 421 views

Gettingtherequickly

My mum died recently and everything is being sorted for probate, will says equal distribution of the estate, but my sister is trying to control everything.

This is not in the UK, so I appreciate that there may/will be legal differences, but I imagine that the legalities before final distribution will be similar.

The estate consists of 2 properties, some land and a little bit of cash.  My brother and I knew my sister would lay claim to the most valuable section, so she was a bit surprised when we said no, that would not be equal distribution.  I know that the easiest way to deal with it is to place everything on the market, but she has proposed that we buy her share, (she is very money orientated, so wants the money yesterday), which we are in agreement with, but just need to agree the value. We have proposed a lower value than she expected, but she can have the money relatively quickly comparative to placing everything on the market and it being stuck there for years, which is a very likely scenario.  She wants more, but also wants us to cover all costs involved. What % reduction would be a reasonable offer, eg for ease of numbers, each share 100k, so to offer 80k would be a reasonable offer, plus she shares costs?

With regard the cash, my brother is owed money, which is not an issue, there is enough cash to pay this to him, but there will not be enough to cover everything else, I know that we will need to pay the balance, but in what order should it be allocated?  At the moment, there is that cash owed to him, I am owed 1.2k for expenses (insurance, utilities etc), sister the same, solicitors. So for example, as the debt will exceed the cash, will the amount I owe the solicitors be reduced by the amount I am owed( though I imagine, I will have to owe my brother) or am I overthinking the situation?

Linton

Any comment can only be based on UK law and UK tax. Things may not work in the same way elsewhere.

This is the situation as it appears to me (I am not a lawyer)

 I suggest you work out what is happening on the basis that the estate is a separate person alongside your brother and sister.  It is the duty of the executors to ensure that the estate meets its obligations and is not short-changed.  I assume you and your siblings are all executors and the only beneficiaries.

The estate owns 2 houses, some land, and some cash.  It needs to pay out cash or agreed assets such that (in order):
1) The funeral and executor costs are paid
2)  Any creditors are paid
3) The beneficiaries are paid equally according to the will

If all adversely affected beneficiaries agree, the terms of the will can be changed in any way they want.  Assume they dont want to change the terms of the will:

The executors need to get a valuation of the properties and land from someone independent and suitably qualified.  If it is then possible to meet the terms of (1)-(3) the assets could be allocated appropriately.  If not the estate will need to sell some or all of the assets.  No-one has any prior claim to any of them.

If the assets are sold there will be costs.  It is usual for the buyer and the seller(ie the estate) to each pay their own costs.  The estate's costs form part of (1).  Once the assets are sold and all costs paid the estate can then be distributed.

To meet your sisters requirements:

1) You and your brother could buy the house at the valuation price from the estate.  The money then goes into the pot and it may then be possible for the estate to meet its obligations.  Do you have the money to buy the house?  Note that it is possible for the distribution and purchase of the house to happen simultaneously so you can use part of your inheritance.

2) Some time later you and your brother could sell the house 

Two problems could arise:
 - tax
 - what happens if the sale price is significantly different from the valuation? Someone could get upset.

getmore4less

You need to do a full inventory and account.

Then the cash flows will become apparent.

If taking on property and that is agreed it is often normal for that person to take on responsibility for the costs at a point earlier than final estate.

We have proposed a lower value than she expected, but she can have the money relatively quickly comparative to placing everything on the market and it being stuck there for years, which is a very likely scenario.

Everything has a price for a quick sale.
If you can't agree then the next step is to market at your offer with a time limit after which your offer stands.

or you go with a put up or shut up ie. sis has to make a better offer to buy you out.

The simple way is to offer to buy off the estate at gross value where the net value after expenses ends up in the distribution pot.
(its all a paper exercise until the amount you need to put in or take out of the estate is calculated)


As has been pointed out once agreed you carry the risks of changes in value sis can't come back for more and you can't get any back if it eventualy sells for less..

Gettingtherequickly

Thanks to you both.  We have probate valuations, so are using those as the base point.  The funeral has been paid for, so we only need to be concerned about the solicitors charges and our own amounts due, most of which will be due to my brother.

Thankfully, sis seems a bit more amenable to our offer, so it is now just a matter of actually agreeing the amount.  Whether brother & I have a longer term gain or loss is to be established, but as long as the initial distribution is as per the will, it will be fine.

theoretica

Gettingtherequickly said:

Whether brother & I have a longer term gain or loss is to be established, but as long as the initial distribution is as per the will, it will be fine.

Will your sister really be fine if she sees you making a profit?

I would suggest you agree to outsource the valuations - agree on an estate agent and ask them to provide realistic sale valuations for a fast sale to complete in 2 months.  Actually, I suggest it would be worth considering changing your minds and trying to arrange rapid sales.  I would be a cleaner break than having your sister repeatedly calculating whether she came off better or worse out of the agreement.

Marcon

Gettingtherequickly said:

This is not in the UK, so I appreciate that there may/will be legal differences, but I imagine that the legalities before final distribution will be similar.

Maybe that's the first thing to check? There might be a significant difference between what you imagine and what actually prevails in the country you're talking about.