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When to pay the charities

Hello again people, once i have probate and i am in a position to distribute funds-i wonder if someone can clarify something for me. The will stipulates that 5pc of residual estate goes to two charities (so 10pc in total). Obviously when applying for probate i will have given the values of estate at death so the amount has already been worked out. If the property sells for more (which we have a buyer paying approx 30k more that probate value) do i change the amount that i give to the charities ? Or do they still get the probate amount? I realise that there may be CGT to pay on the 30k. I just want to make sure I’m understanding properly. If anyone has understood what I’m asking, please advise me-thanks
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Comments

  • p00hsticks
    p00hsticks Posts: 13,950 Forumite
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    My laymans understanding is that if the property is still in the name of the estate at the point of sale then the sale proceeds become part of the estate and any CGT is paid from the estate before distribution.

    The residual estate is what is left after all asset have been gathered in / liquidated and all liabilities paid, so in circumstances like this not necessarily exactly the same as what was declared for probate - although I suspect the charity may ask for an explanation if the final figure is much lower that .

    The charities will expect to get a figure that is 5% of the final residual estate, not necessarily the value declared at probate)  and may indeed ask to see the final estate accounts. 
  • Thanks for that so in simple terms:
    1. Collect all monies inc house sale
    2. Pay off any debts to estate
    3. Pay the rest of IHT…(have already paid some before probate gained) work out CGT…less estate agents, solicitor fees, allowances pay that
    4. What’s left…deduct 5pc each for two charities-pay them including a estate account statement
    5. last 90pc is split between the two beneficiaries 
    am i correct, or am i missing something?
  • RAS
    RAS Posts: 34,457 Forumite
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    Correct. Too short
    If you've have not made a mistake, you've made nothing
  • @RASRAS said:
    Correct. Too short
    Sorry what do you mean ?
  • Keep_pedalling
    Keep_pedalling Posts: 19,311 Forumite
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    @RASRAS said:
    Correct. Too short
    Sorry what do you mean ?
    Replies have to be at least 10 characters long, I think RAZ just added the too short bit in order to post a reply.
  • Brie
    Brie Posts: 13,477 Ambassador
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    Does one have to notify the charities that they are beneficiaries?  I've heard of some getting feisty about agreeing to property sales if the price isn't high enough (in their opinion) particularly when they get a percentage rather than a flat amount.  
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  • emma203
    emma203 Posts: 41 Forumite
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    Brie said:
    Does one have to notify the charities that they are beneficiaries?  I've heard of some getting feisty about agreeing to property sales if the price isn't high enough (in their opinion) particularly when they get a percentage rather than a flat amount.  
    My mother left 5% of her estate to be split between 3 charities and I, as executor, wrote to them once probate was granted to advise them that they were beneficiaries and that I would contact them again once the admin was completed. I don't know if I had to do this strictly speaking, but with probate the will content became public and I felt that being up front with them was more likely to smooth the process. 

    This proved to be the case and none created any problems. I sent them all a copy of the final accounts and the will, plus the estate agent valuation for probate requested by the one that was a major national charity. 

    I've seen many discussions here on what beneficiaries are/are not legally entitled to, but I found that being proactive and accepting what seemed to me to be reasonable requests for information avoided a lot of potential stress. 
  • p00hsticks
    p00hsticks Posts: 13,950 Forumite
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    Brie said:
    Does one have to notify the charities that they are beneficiaries?  I've heard of some getting feisty about agreeing to property sales if the price isn't high enough (in their opinion) particularly when they get a percentage rather than a flat amount.  
    As far as I'm aware an executor isn't legally obliged to notify any beneficiaries, charities or otherwise,  prior to actually distributing the estate and giving residual beneficiaries sight of the final estate accounts. 

    Some charities (and individuals) do monitor grants of probate though and become aware of their bequests that way. Although we do get posts on this board from time to time warning people about leaving percentage bequests to charities for the reason you suggest, in my personal experience (backed up by others when I've posted on the subject before) charities have been very grateful for the money they received and not at all pushy or 'feisty'.

    One did ask for a copy of the estate account (as was their right) but I never heard anything further and I suspect unless it is obvious that for whatever reason an executor has failed in their duty and sold things for well under market value for whatever reason, they would not challenge the value of the bequest - they may have legal teams on side , but the resulting bad publicity would probably outweigh the potential financial gain.    .   
  • Grumpy_chap
    Grumpy_chap Posts: 17,053 Forumite
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    If the property sells for more (which we have a buyer paying approx 30k more that probate value) do i change the amount that i give to the charities ? 
    Yes.              
  • GDB2222
    GDB2222 Posts: 25,726 Forumite
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    I am sure the answer is yes, but you allowed for the 36% IHT rate?


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