Executors account and Stamp Duty questions

Bessiesmum2005

Background:  My husband and his sister are executors for their late father who died in 2017, and they are the only beneficiaries to the estate (50/50). The estate comprises of savings, shares etc, and there is a property in which the sister has lived all of her life.

First question. They opened an executors account in early 2018 and sister has been administering it ever since, my husband has had very little to do with it apart from the opening formalities.  He has not had any payout from it, just the odd cheque here and there for things he has bought to do repairs and such like to the property.  The sister has drawn money from it to pay for the central heating to be replaced in the property, and she also issues cheques from it to pay for the buildings insurance.  

I have always thought that such accounts are there purely to gather in the assets of the deceased, to settle any debts, to cover any legitimate estate expenses, and to then distribute any monies in accordance with the Will.  My husband though has said that the executors account can be used any way that the executors think fit, and that it will stay open and continue to be used as such until the house is sold (if it ever is). Is this correct?

Next question. They haven't done anything to formally transfer the deeds into their names as yet, and I know that this is quite common in that it can all be done when the property is sold.  However, we are considering downsizing next year and I'm concerned that we will have to pay the higher rate of Stamp Duty on any new house, as my husband now has interest in two properties (our current house and his dads).  Husband has said that as the deeds haven't been formally transferred to him and his sister, then he doesn't have any interest in the property and so we will just pay the normal rate of Stamp Duty. Is this correct?

Any clarification on the above questions would be gratefully received.

Keep_pedalling

Regardless of the ownership of your FIL house you won’t pay additional SDLT because you will be selling and buying at the same time.

Frankly your SIL is is treating your husband like a mug and he now needs to step up to the plate and sort this out, the estate should have been distributed years ago.

What is the value of the estate and how much of that is tied up in the house? 

user1977

What is the plan for the house? If it's either being sold in the short term, or your SIL is buying out your husband's share, I wouldn't expect it to be transferred into his personal name at all.

RAS

Does the will leave the sister with the right to reside until her death? In which case she is probably personally responsible for the upkeep of the house (check the will). 

Either way your husband needs to go to a STEP solicitor and understand exactly what should be happening to the estate. It is normal for the house to be put on the market when probate is granted, unless there is a trust allowing the sister to remain. In which case, the rest of the estate should have been distributed before she started spending money.

Bessiesmum2005

Thank you so much for your replies. 

Thanks @Keep_pedalling for your answer to the stamp duty question; that is a weight off my mind.  You're right, he is a mug, but his sister is a very controlling person and he believes everything she tells him, always has done. The value of the estate on the Grant of Probate is <£225k, but I'm not sure where that figure came from.  The house at the time was worth at least £300k (probably nearer £350k now), FIL had a debt to his care home of about £45k, and he had savings and shares in excess of £50k that I know about.  I think they undervalued the house to avoid IHT (and yes I told him at the time that they could apply to use the residence nil rate band).

@user1977 SIL says she is going to sell up but in the time since FIL died she has looked at one house.  I don't think she is ever going to sell. 

@RAS No, there is no provision in the Will for her to reside there.  The Will is very simple and straightforward, the estate is to be split between them and that is that.  FIL just wanted to make things easy for his children.  I will try to persuade him to seek legal advice, but he honestly doesn't think anything is wrong. 

Again thank you all for your replies. They have helped me enormously in that what I thought should be happening with the estate is correct.  Whether I'll be able to convince the husband is another matter.  Wish me luck.

msb1234

Yep, she’s taking your husband for a bit of a fool. Either she buys your husband out by paying him half the value of the house as it currently stands, or the house is sold and the proceeds split. He needs to have a consultation with a solicitor to find out where he stands legally. Even better if his sister went with him so they both got the same information.

user1977

msb1234 said:

Yep, she’s taking your husband for a bit of a fool. Either she buys your husband out by paying him half the value of the house as it currently stands, or the house is sold and the proceeds split. He needs to have a consultation with a solicitor to find out where he stands legally. Even better if his sister went with him so they both got the same information.

Sounds like an instant conflict of interest for the solicitor though, unless husband and sister suddenly see eye to eye.

thegreenone

Is Sister aware of Capital Gains Tax?  Holding on to the property, under-valuing it and not using the Nil-Rate Band could have cost the estate dearly.  If sister has mismanaged, it should come out of her portion.  Your husband needs to step up to his sister and employ a solicitor.

Capital Gains Tax to pay for the 2023 to 2024 tax year - Calculate your Capital Gains Tax - GOV.UK

I did some basic, guesswork calcs based on what you have told us above and CGT comes out at nearly £30k.   Will stand corrected.

And she was worried about IHT.

Bessiesmum2005

Thank you all again. I'm trying to get him to get some legal advice, but he doesn't want to think that his sister is making a mug out of him, so would rather not know.  

Bessiesmum2005

@thegreenone I think you're right.  I did say to him at the time the IHT return was done that any undervaluing of the house would be detrimental with regard to CGT, but she's an accountant so he assumed she knew what she was doing.

Keep_pedalling

thegreenone said:

Is Sister aware of Capital Gains Tax?  Holding on to the property, under-valuing it and not using the Nil-Rate Band could have cost the estate dearly.  If sister has mismanaged, it should come out of her portion.  Your husband needs to step up to his sister and employ a solicitor.

Capital Gains Tax to pay for the 2023 to 2024 tax year - Calculate your Capital Gains Tax - GOV.UK

I did some basic, guesswork calcs based on what you have told us above and CGT comes out at nearly £30k.   Will stand corrected.

And she was worried about IHT.

CGT won’t be an issue for her as it is her main residence, it will however be an issue for the OP’s husband. Under declaring the value was a really stupid thing to do as his estate was miles away from being liable for IHT.