One inheritance beneficiary buying their share their house from the others - how to value?

Merryl25

Hi there

In 2020 a distant relative died leaving me with a 4th stake in their estate (the other beneficiaries being another relative and 2 charities). However, the will was disputed by another party who claimed to have been the relative’s live-in partner of two years. We’ve never had proof that she was apart from the fact she was living in his house.

Anyway, myself and my relative are of little means, wanted to avoid court which would probably bankrupt both of us, and she had an aggressive, non-communicative, non-cooperative lawyer, so despite her not being mentioned in the will (which was old but had never been updated) we agreed to give her the benefit of the doubt and give her a majority stake of the estate. The charities also agreed as the dispute had been going on for years. We did have representation for a while but he just wrote lots of expensive emails and got us nowhere.

After agreeing percentages in April in principle, along with the fact that she could buy the house if she was able (which forms the bulk of the estate) we have just been sent the agreement to sign by the executor (who are solicitors who’s fees are now around £17,000) after lots of chasing, where her lawyer confirmed that she wishes to buy the property (note how it took 4mths to notify of that decision). What is proposed is a £10,000 discount on the date of death valuation of £325,000 to account for the fact that the estate will save the costs of marketing, and also because she has paid all property expenses since our relative’s death and will continue to do so until completion of her purchase.  So she will pay £315,000.

A RICs valuation was done establishing the date of death valuation of £325,000 and also a current market value of £365,000.

I understand that the date of death valuation is necessary for probate (which it hasn’t gone through yet). But why would they propose an agreement where she pays the 2020 price and not the current value? Is this some weird rule I don’t know about? As an executor, isn’t it is your responsibility to ensure that the sale price is the best you could reasonably obtain?

And in addition, a £10,000 discount is proposed as she has covered the property’s expenses but shouldn’t the fact that she has been living rent free for 3 years also be taken into account? A saving of £30,000-£40,000.

I have the impression that the executor just wants this sorted at any price and for the lady living in my deceased relative’s house, she has nothing to lose by just dragging this out indefinitely.

Marcon

Merryl25 said:

Hi there

In 2020 a distant relative died leaving me with a 4th stake in their estate (the other beneficiaries being another relative and 2 charities). However, the will was disputed by another party who claimed to have been the relative’s live-in partner of two years. We’ve never had proof that she was apart from the fact she was living in his house.

Anyway, myself and my relative are of little means, wanted to avoid court which would probably bankrupt both of us, and she had an aggressive, non-communicative, non-cooperative lawyer, so despite her not being mentioned in the will (which was old but had never been updated) we agreed to give her the benefit of the doubt and give her a majority stake of the estate. The charities also agreed as the dispute had been going on for years. We did have representation for a while but he just wrote lots of expensive emails and got us nowhere.

After agreeing percentages in April in principle, along with the fact that she could buy the house if she was able (which forms the bulk of the estate) we have just been sent the agreement to sign by the executor (who are solicitors who’s fees are now around £17,000) after lots of chasing, where her lawyer confirmed that she wishes to buy the property (note how it took 4mths to notify of that decision). What is proposed is a £10,000 discount on the date of death valuation of £325,000 to account for the fact that the estate will save the costs of marketing, and also because she has paid all property expenses since our relative’s death and will continue to do so until completion of her purchase.  So she will pay £315,000.

A RICs valuation was done establishing the date of death valuation of £325,000 and also a current market value of £365,000.

I understand that the date of death valuation is necessary for probate (which it hasn’t gone through yet). But why would they propose an agreement where she pays the 2020 price and not the current value? Is this some weird rule I don’t know about? As an executor, isn’t it is your responsibility to ensure that the sale price is the best you could reasonably obtain?

And in addition, a £10,000 discount is proposed as she has covered the property’s expenses but shouldn’t the fact that she has been living rent free for 3 years also be taken into account? A saving of £30,000-£40,000.

I have the impression that the executor just wants this sorted at any price and for the lady living in my deceased relative’s house, she has nothing to lose by just dragging this out indefinitely.

What do the charities say? If they are sizeable they will have their own in-house legal team, and there are few things sharper than charity lawyers keeping tabs on an inheritance.

Merryl25

This is what we thought in the beginning as they were sizeable but in reality they haven't engaged at all and don't seemed bothered as long as they get something. One has now gone into administration. 

Grumpy_chap

Marcon said:

What do the charities say? If they are sizeable they will have their own in-house legal team, and there are few things sharper than charity lawyers keeping tabs on an inheritance.

That was my first thought.
Peculiarly, the OP states:

Merryl25 said:

The charities also agreed as the dispute had been going on for years. 

Merryl25

It's been very frustrating that the charities haven't been interested in getting involved in the negotiation. They have been happy to sit back and wait it out. I suppose that's the least amount of work to do and as I said, one of them is now in administration. They both still have to agree though on the deal proposed by the executor, to sell the house at the 2020 valuation with a £10,000 discount.

Marcon

Grumpy_chap said:

Marcon said:

What do the charities say? If they are sizeable they will have their own in-house legal team, and there are few things sharper than charity lawyers keeping tabs on an inheritance.

That was my first thought.
Peculiarly, the OP states:

Merryl25 said:

The charities also agreed as the dispute had been going on for years. 

Yes, I'd spotted what OP had said on the matter - but hoped that at this point they might take a more active interest.

billy2shots

Break it down. Is it really worth the heartache.

'Distant relative' , so more of a windfall for you.

Your top figure £365k.

Her low figure £315k

That's £50k difference. 

You originally said you had a 25% share which would mean the difference to you is £12,500.

Subsequently you have made a new deal with relative's partner diluting your 25% share further (you don't say what that is ) so that £12.5k has shrunk further.

This is all before any inheritance tax. 

Your share is also Shrinking due to ongoing legal costs. 

Get it done. 

Merryl25

billy2shots said:

Break it down. Is it really worth the heartache.

'Distant relative' , so more of a windfall for you.

Your top figure £365k.

Her low figure £315k

That's £50k difference. 

You originally said you had a 25% share which would mean the difference to you is £12,500.

Subsequently you have made a new deal with relative's partner diluting your 25% share further (you don't say what that is ) so that £12.5k has shrunk further.

This is all before any inheritance tax. 

Your share is also Shrinking due to ongoing legal costs. 

Get it done. 

You have a point but we have already given away a lot 'to get it done'. The will named myself and another relative plus 2 charities as having a 25% share each. The charities agreed to give away 5% each and we agreed 15% each so the 'partner' who was not named on the will at all (and who could have been a housekeeper for all we know as our relative would have needed one because of his disabilities) could receive 40%. And now she wants the house super cheap. My question is, is this normal to sell the house for the date of death valuation and not the current valuation?

msb1234

Is that 15% of your 25% share or 15% of the overall estate? 
You can sell the house for whatever amount you choose -  if you disagree, then as with any house sale, you negotiate. 
I know you said that she wasn’t in the will, which your distant relative wrote many years ago, but if he had made a new will he could very easily have left everything to her. I think you need to treat this inheritance as a bonus for your own peace of mind. 

Merryl25

These are all valid points thank you. I have now a 10% share of the estate if we sign the agreement so I gave away 15%. Of course the charities may not accept the house being sold for £50,000 under the market value anyway.

billy2shots

So we are now talking potentially losing £5,000 by going with the lower valuation. 

'Distant relative'

'Dispute going on for years'


My first comment finished with, get it done. 

I'm not sure what else anyone would advise given the position you have outlined.