Sell a house I am executor for, ‘cheap’ to a member of my family

Mutton_Geoff

As executor, you should obtain a "red book valuation" and not use regular agents valuations.

The big charities employ whole teams of people to check they are not short changed and obtain copies of wills that have gone to probate to see what they are due.

I made an innocent minor error that short changed 4 well known charities by less than £100 in their £25k legacies. All of them pursued me for the outstanding money as they cross checked my workings vs the will.

Since I'd already distributed the money to other beneficiaries, I ended up paying this out of my own pocket.

I would work with impeccable behaviour as an executor and not try to play the system at all, especially where charities & HMRC are concerned.

Keep_pedalling

Alderbank said:

No one seems to have asked anything about the status of either the house or the family member?

I assume that the house was occupied by just two people, the deceased and the family member who was their carer, and is now just occupied by the family member? Not an uncommon situation.

Perhaps since the bereavement the family member has offered payment to the executor? If that was accepted the family member has become a tenant. It would not now be possible to sell the property with vacant possession. It would be quite reasonable that the best deal for the estate would be to accept a reduced offer from the sitting tenant.

That is a very large assumption, the OP has only mentioned that a family member wishes to buy the house. Even in the unlikely event that there was is sitting tenant it would be foolish to accept a low offer without approval of the two beneficiaries.

Choirgrl

BiturboV12 said:

I agree that it is only right that the charities getting their bequeathed amounts. The charities are the only beneficiaries apart from my wife and I who are getting a small nominal payment for duties carried out.
If I get three valuations would it be fair to go with the lowest one for the family member? We are talking of a value approximately 300k as it stands right now. The Will states that two charities get 50% each on disposable of the property.

Rather than guessing what would be fair, I suggest you contact the two charities, tell them what you propose to do, and ask if they are happy with that approach. If selling to the family member  at a lower valuation and avoiding EA fees will result in them receiving more than selling at a higher valuation and paying fees then they are likely to agree. If it won’t then they are least likely to.

Charities are legally required to make sure they receive the amount they are entitled to from a bequest in a Will. What some people characterise as “money grabbing” etc is the staff fulfilling the charity’s legal responsibilities. (Where a charity has a dedicated legacy team, they are usually very knowledgeable and experienced and can be helpful to Executors on issues like options for minimising IHT). Talking to them before taking action on anything which is a grey area will always be a better approach than not talking to them and risking that they challenge your decision later. Keeping in mind an earlier posters’ experience of having to make good a bequest after a maths error, you can also share draft Estate Accounts with them so that they can check the figures before any distributions are made. (Source: work in charity sector, formerly specifically in legacies).

mi-key

You say the charities are willed to get 50% of the house proceeds each, so the only way you could keep them happy, carry out the deceased wishes and sell to a family member would really be to put the house on the open market, and if they make the only, or highest offer, then to sell to them.

This means they would basically be paying full market value for it, so wouldn't be getting any benefit from buying it.

Grumpy_chap

This idea seems to be nothing more than an attempt to circumvent the wishes of the Testator. 
Those wishes are for the estate to be split between the two charities. 
The Executor is duty bound to implement the wishes as recorded in the Will.  
The Executor seems to be wishing to create a benefit for a family member by selling the property at below market value.  This is not as the Testator wished.

Selling the property below market value will not affect:

• the amount due to the two charities
• the value of IHT liable
• the amount of SDLT payable

All of the above are calculated on the open market value of the property.

If the family member wishes to purchase the house, the best thing would be to list the house for sale via conventional channels and the family member can purchase the house at the highest offer received.

Mutton_Geoff

mi-key said:

You say the charities are willed to get 50% of the house proceeds each, so the only way you could keep them happy, carry out the deceased wishes and sell to a family member would really be to put the house on the open market, and if they make the only, or highest offer, then to sell to them.

This means they would basically be paying full market value for it, so wouldn't be getting any benefit from buying it.

You can't sell a house (or other assets) until probate is granted. Probate is not granted until any IHT is paid. It's a chicken & egg situation but in these circumstances, you can't use the market to determine real value and in any case, many agents won't even take the house on until probate is granted.

Canny buyers would also avoid making serious offers on any house where probate hadn't yet been granted. Red book (RICS valuation) is the only way.

Keep_pedalling

With regard to IHT, bequests to charity are exempt, so regardless of the value of the estate there will be no IHT to pay as the bulk of this estate is going to charities.

Mutton_Geoff

Keep_pedalling said:

With regard to IHT, bequests to charity are exempt, so regardless of the value of the estate there will be no IHT to pay as the bulk of this estate is going to charities.

Not true. The £325,000 threshold still applies so if there is more than that left after charitable donations (and other exempt legacies), then tax is due. If you leave 10% or more to charity then the IHT on > £325k is 36% instead of 40% but there will only be no IHT to pay if the charitable (and exempt) legacies bring the balance below £325k.

https://www.gov.uk/inheritance-tax

Keep_pedalling

Mutton_Geoff said:

Keep_pedalling said:

With regard to IHT, bequests to charity are exempt, so regardless of the value of the estate there will be no IHT to pay as the bulk of this estate is going to charities.

Not true. The £325,000 threshold still applies so if there is more than that left after charitable donations (and other exempt legacies), then tax is due. If you leave 10% or more to charity then the IHT on > £325k is 36% instead of 40% but there will only be no IHT to pay if the charitable (and exempt) legacies bring the balance below £325k.

https://www.gov.uk/inheritance-tax

I based my statement on the fact that the OP said him and his wife will receive a nominal sum with the rest going to the 2 charities. 

Mutton_Geoff

Keep_pedalling said:

I based my statement on the fact that the OP said him and his wife will receive a nominal sum with the rest going to the 2 charities. 

And I based my reply on your claim "regardless of the value of the estate". Who knows, the OP might be talking about a £10m house and "nominal sum" of a million or so