Intestacy and rental property questions

Bloomfieldlady

Hi, my first post here, I'm
hoping your collective knowledge might be helpful!
To try to be brief, my MIL died without a will last year. My husband has applied for probate/letters of administration, with the assistance of our solicitor. 

There are two other siblings and the fairly substantial estate will obviously be split equally three ways.
My SIL lives in one of the properties on the estate and has not paid rent for around 20 years as far as we are aware. She has no tenancy agreement. As we have been told that probate could take around 12 months to be granted (if we are lucky!), it is quite a juggling act to keep the estate running and bills paid with minimal accessible cash in the coffers. My husband would like his sister to pay rent to help, but she is very “testy” to say the least, and is adamant she won’t.  What are his rights as things stand now? Will he have to wait until he has been granted LOA before he can do this? 

The property concerned has fallen into complete disrepair since she has lived there, and it will take a lot of work and money to make it suitable to rent or sell to someone else. Is this something that can be taken into account once we are at a stage of being able to disperse the estate?

Keep_pedalling

There may be no written tenancy agreement but you can’t start to make her pay rent to the estate now. She was obviously allowed to stay there rent free by your MIL and your husband cannot make changes to that agreement and he can’t deduct anything from her share of the estate for any deterioration to the while she has lived there as that was still the responsibility of your MIL.

If the property she is living in is worth less than 1/3 of the estate once expenses and IHT have been deducted the simplest solution would be to let her have the house as part of her share provided she wishes to stay put. 

bobster2

Bloomfieldlady said:

The property concerned has fallen into complete disrepair since she has lived there, and it will take a lot of work and money to make it suitable to rent or sell to someone else. Is this something that can be taken into account once we are at a stage of being able to disperse the estate?

I'm sure others will be along with advice on the rest.

But the role of an executor / administrator is collect and maintain assets. So essential repairs/maintenance could be funded from the estate. However, they shouldn't be deciding to use estate funds to upgrade / improve a property.

Upgrades/improvements are things that beneficiaries could choose to - if all the beneficiaries agreed that upgrades/improvements were in their collective interests.

https://www.kctrust.co.uk/blog/can-property-improvements-and-upgrades-be-made-during-estate-administration

Keep_pedalling

The sister is in a very strong position, assuming she moved in on or after the 28th Feb 1997 she will be deemed to hold an assured short hold tenancy (AST) which means she can’t be forced to start paying rent or be evicted without going through a long winded and potentially expensive process.    

If she has been there longer than that then she is probably has an assured tenancy which will make things even harder. Your husband needs to avoid being confrontational and making any demands and use a bit of tact and diplomacy to resolve this, otherwise things could get extremely messy.

silvercar

If the property your SIL lives in is worth less than one third of the estate, the easiest solution would be for that property to become hers under the division of the estate. The remaining estate should then be split 3 ways taking account that the sister has already had the value of the property she lives in.

RAS

Just to add that making SIL pay rent would expose the estate to all the legal rules that apply to landlords. You do not want that, whatever happens. 

Not least as the house won't comply with any of the basics, so the estate will have to pay for a lot of work, and if SIL takes the issue to the Council, they can force the estate to do work, even if there is no money.

Bloomfieldlady

Thank you very much for your helpful comments. 

It’s sort of as we thought. It may be like poking a hornets nest if we try to get some form of rent paid by the SIL, so perhaps it’s best left and maybe try to work out a way of making the property “her share” of the total estate when it comes to distribution.
On the matter of distribution, we have been told that all three beneficiaries have to agree with the method of distribution when that time comes. If one of them doesn’t agree, what happens? Does the whole thing come to a crashing halt and do we have to go through mediation or similar? Does the sibling with LOA have the final word? 

I have a feeling that one sibling will disagree with everything (just because they can….) but the other two will be happy to just get the estate wrapped up as quickly as possible. I have tried Googling and it’s all very vague information, and our solicitor has told us to not even think about it until probate/LOA is granted…..has anyone had any experience of the process that could give us any clue??

Keep_pedalling

Assuming the difficult one is the one occupying the house then it should not be too difficult to distribute the estate providing the house is worth no more than 1/3 of the distributable estate. Just transfer the house into her name and liquidate all the other assets and distribute as cash. 

If IHT is due then at least 10% of that will need to be paid within 6 months of the death.

Hoenir

Bloomfieldlady said:

I have a feeling that one sibling will disagree with everything (just because they can…

Perhaps it's a reaction to what has been suggested. Which could be regarded as antagonistic. 

Is there any possibility that the sibling will lose their home? 

msb1234

The role of the executor is to distribute the estate according to the will. In the absence of a will, the person who obtains letters of administration should consolidate any debts and assets of the estate then distribute according to the rules of intestacy. The LOA will give them the legal right to sell any properties, they don’t need permission of other beneficiaries. I am currently selling my mums house as executor. The conveyancing solicitor has told me she will pay all the proceeds from the sale into my personal account and it is my responsibility to distribute to the 4 beneficiaries. I did ask if it was possible for her to distribute it directly to each beneficiary but she said not.

Bloomfieldlady

Hoenir said:

Bloomfieldlady said:

I have a feeling that one sibling will disagree with everything (just because they can…

Perhaps it's a reaction to what has been suggested. Which could be regarded as antagonistic. 

Is there any possibility that the sibling will lose their home? 

There hasn’t been any conversation yet between the siblings regarding the SIL paying rent, so no antagonism should have been construed from our POV.