Executors, property valuations and self dealing?

whoelsewantstoknow

My elderly father lives in New Zealand. My mother died recently so dad has now made my older sister his sole executor - we also have two other siblings. In Dad's will, his 4 properties (one is his former home, two others are rental properties and one is a beachfront/holiday home) are to be shared between us so we receive one property each with payments to be made from the residual cash/ shares to ensure that the inheritance each receives is roughly equal. There is no inheritance tax in NZ. Dad is currently living in a retirement property and has sufficient funds to remain there for many years to come.

My question relates to my sister being sole executor. She is quite manipulative and money-oriented and frankly I don't trust her. She wants to inherit the holiday house (which is significantly more valuable than the other properties). There is no problem with this, but can she influence the valuation if she is sole executor? An estate agent valued the property 18 months ago at "between 3 and 4.5 million" This is obviously quite a wide difference. If sister is responsible for the valuations, she'd probably get one for $3m?

If dad were to appoint a second executor (one of my NZ-based siblings, as I am not living locally), would this make it easier to ensure the future valuations are fair? Or is it just as easy for beneficiaries to query valuations they don't agree with?

Keep_pedalling

It is never a good idea to appoint a single executor, so It would be sensible for him to appoint a second in case anything happened to your older sibling. 

p00hsticks

If this was in the UK (and accurate justifiable valuations were therefore needed for IHT purposes) the advice would probably be for the estate to engage a qualified RICS surveyor to carry out a 'red book' valuation on each of the properties.

I've no idea if there is any equivalent in NZ...

Another option, if father was amenable,  would be for the will to request that all four properties be put onto on the open market, with the sale proceeds to be divided equally between the four beneficiaries (do you really want to own a NZ property, or would you prefer the cash ?). Tat would let market forces determine the values, and if any beneficiaries wanted a particular property then they could offer for it with the highest bidder taking it. 

How is it going to be decided who gets which property ? What is going to happen if more than one wants property A, but no one wants property B, for example ? I can see it all potentially ending in tears and anger....

whoelsewantstoknow

If this was in the UK (and accurate justifiable valuations were therefore needed for IHT purposes) the advice would probably be for the estate to engage a qualified RICS surveyor to carry out a 'red book' valuation on each of the properties.

I've no idea if there is any equivalent in NZ...

Another option, if father was amenable,  would be for the will to request that all four properties be put onto on the open market, with the sale proceeds to be divided equally between the four beneficiaries (do you really want to own a NZ property, or would you prefer the cash ?). Tat would let market forces determine the values, and if any beneficiaries wanted a particular property then they could offer for it with the highest bidder taking it. 

How is it going to be decided who gets which property ? What is going to happen if more than one wants property A, but no one wants property B, for example ? I can see it all potentially ending in tears and anger....

Thanks, I will look into whether there's a Red Book equivalent. Quick Google seems to suggest that RICS valuations tend to be on the lower side, is that accurate?

Regarding distributing the properties, there's no major problem: One sister wants the holiday house, another wants the family home. My brother and I are happy to inherit either of the two rental properties, I will likely sell any property I inherit.
 
I agree that selling the properties on the open market would be the fairest solution, but am sure my older sister would not want to do this because she knows she wants to keep the property. If she is to be the sole executor, would she be responsible for making that decision? How would this differ if there were multiple executors (eg my two siblings were also executors).

Savvy_Sue

whoelsewantstoknow said:

If this was in the UK (and accurate justifiable valuations were therefore needed for IHT purposes) the advice would probably be for the estate to engage a qualified RICS surveyor to carry out a 'red book' valuation on each of the properties.

I've no idea if there is any equivalent in NZ...

Another option, if father was amenable,  would be for the will to request that all four properties be put onto on the open market, with the sale proceeds to be divided equally between the four beneficiaries (do you really want to own a NZ property, or would you prefer the cash ?). Tat would let market forces determine the values, and if any beneficiaries wanted a particular property then they could offer for it with the highest bidder taking it. 

How is it going to be decided who gets which property ? What is going to happen if more than one wants property A, but no one wants property B, for example ? I can see it all potentially ending in tears and anger....

Thanks, I will look into whether there's a Red Book equivalent. Quick Google seems to suggest that RICS valuations tend to be on the lower side, is that accurate?

Regarding distributing the properties, there's no major problem: One sister wants the holiday house, another wants the family home. My brother and I are happy to inherit either of the two rental properties, I will likely sell any property I inherit.
 
I agree that selling the properties on the open market would be the fairest solution, but am sure my older sister would not want to do this because she knows she wants to keep the property. If she is to be the sole executor, would she be responsible for making that decision? How would this differ if there were multiple executors (eg my two siblings were also executors).

We can tell you how things are supposed to work with multiple executors in the UK, dealing with properties in the UK, but we might be completely wrong about the situation in NZ. 

Red Book valuations (again in the UK): should be based on value at the date of death, not thinking about potential value if x, y or z happened. EA valuations may veer towards "how much might someone be prepared to pay for this because we're in a good catchment area for schools and if I say we can get £500k they may agree to use my company, even though in reality I have never sold one of these for more than £400k" territory. And indeed, a house may sell for a lot more than a Red Book valuation, because the executor(s) decide to apply for planning permission, or spend a lot of money making improvements. 

Again, in the UK, this is a situation where appointing a professional executor should ensure that the estate is dealt with according to what's in the will, but it will cost more and take longer.