House in will, using estate cash to improve?

tigertrio

A will is being split where the house is going to a few people and the residual value of cash is going to another set of people.

So for example, let's say the house has been sold for 300K and there was 100K in cash and other assets.

So, not withstanding any special terms in the will, just in general...

1. Can the cash from the estate be used for home improvements before the house is sold e.g. new carpets?

2. Can the solictor fees for selling the house be taken from the 100K residual cash? Or should it be deducted from 300K sale price?

3. The inheritance tax was based upon an initial value of the property which was incorrect - it sold for less. There is now a rebate. The inheritance tax was paid out of the cash part of the estate, but the rebate is being returned to the house part of the estate - so going to different people - is this correct?

p00hsticks

My non-expert opinion would be that if the will genuinely does specifically leave the property to A, B and C (rather than state it should be sold and the proceeds divided between A,B, and C) then the executor shouldn't be using the remaining cash to pay the conveyancing or estate agent fees.

After all, A,B and/or C could have decided to retain the property for themselves rather than sell it. Nor should 'improvement costs' for the property be funded from the estate, as this would be detrimentally reducing the cash beneficiaries proportion of the estate to the benefit of A,B and C. (Also, providing the property is able to be mortgaged, with a working kitchen and bathroom, the cost of such improvements are almsot never recouped in a increased sale price).      

In my experience, the conveyancer will most likely deduct their costs and pay the estate agent on completion before sending the balance to the estate account.

I'm not sure about how the IHT rebate should be divided between the two sets of beneficiaries. 

Keep_pedalling

tigertrio said:

A will is being split where the house is going to a few people and the residual value of cash is going to another set of people.

So for example, let's say the house has been sold for 300K and there was 100K in cash and other assets.

So, not withstanding any special terms in the will, just in general...

1. Can the cash from the estate be used for home improvements before the house is sold e.g. new carpets?

No.

2. Can the solictor fees for selling the house be taken from the 100K residual cash? Or should it be deducted from 300K sale price?

Again no

3. The inheritance tax was based upon an initial value of the property which was incorrect - it sold for less. There is now a rebate. The inheritance tax was paid out of the cash part of the estate, but the rebate is being returned to the house part of the estate - so going to different people - is this correct?

No, it is absolutely wrong.

Did the will stipulate that IHT has to be paid from the cash part of the estate.

tigertrio

Thanks everyone, I've since found out that point 1 and 2 are okay due to terms of the will.

It's just point 3 that is concerning.

Keep_pedalling

tigertrio said:

Thanks everyone, I've since found out that point 1 and 2 are okay due to terms of the will.

It's just point 3 that is concerning.

So what were the terms of the will that allows this ? it seems very unusual clause.

Grumpy_chap

tigertrio said:

Thanks everyone, I've since found out that point 1 and 2 are okay due to terms of the will.

It's just point 3 that is concerning.

That is extremely unusual as it would be reducing the amount paid to the residual beneficiaries to the benefit of the beneficiaries receiving the house (or value thereof).

If IHT was paid from the residual estate and the bill over estimated, the rebate of excess IHT should also return to the residual estate.  In the same way as if the IHT assessment had been correct in the first instance, the amount originally met from the residual estate would have been lower.

Being an Executor comes with strict legal responsibilities to administer the Will exactly as written and does not give flexibility to interpret matters to the benefit of one group of Beneficiaries over another.

It will be difficult for more precise comment in the forum without the exact wording of the Will.  (Do not share anything that could allow parties or individuals to be identified.)

Marcon

tigertrio said:

Thanks everyone, I've since found out that point 1 and 2 are okay due to terms of the will.

It's just point 3 that is concerning.

Without sight of the actual wording, it's impossible to comment from an informed standpoint on any of the points you've raised. If the executors have not taken professional advice - and they clearly haven't - they might be well advised to do so before going any further, given that executors can be personally liable if the 'get it wrong'.