2 Empty Houses & Intestate Situation

runner1977

Hello, I have a confusing situation with 2 empty houses and relatives dying intestate.

History:

• My paternal grandparents lived in their mortgage free house (valued around 400K in today's money) for many years.

• My mother and father lived in their mortgage free house (valued around 300K in today's money) for many years.

• 2015 paternal grandmother dies intestate, paternal grandfather remained living in the same house.

• 2017 paternal grandfather dies intestate and house was then unoccupied for a while. Grandparents left behind 2 children (my father and my auntie). My father and aunty were both in receipt of social security benefits so if probate was executed and they inherited 200K each they would lose social security benefits. This, combined with mental health issues of my father and aunty, meant probate was not executed. DWP confirmed this was legal.

• 2018 my mother is diagnosed with brain tumour. She partially recovered but required 24 hour care. My mother moved into the unoccupied grandparents house and received care from various family members and NHS carers 24x7.

• 2020 my father dies (terminal illness) so now my parents 300K house is unoccupied - his will specified 50% of the house would go to my mother and 50% to me.

• 2025 my mother dies intestate.

My parents 300K house is up for sale and a buyer has been found.

The 400K house remains unoccupied because my aunty still does not want to inherit and lose social security benefits.

I thought my parents 300K house could be sold now (I would inherit 100% of this money) and then we could sort out my grandparents 400K house in 5 years time when my Aunty will be over state pension age and says she would be happy to inherit at that point in time.

However, a friend advised me that in this scenario my Aunty could inherit the whole 400K house.

I thought under intestate rules 50% of the 400K house would pass to my (deceased) father and then by default it would pass to me i.e. I would have 200K and my Aunty would have 200K. My friend said that if probate/intestate rules are executed and my parents’ 300K house is sold this year, in 5 years time probate/intestate rules would mean nothing would go to my father from the sale of my grandparents 400K house because probate/intestate has already been executed for my father so his estate would be “closed” and consequently none of the 400K would come to me as inheritance.

Is this true?

Does anyone have advice on a way forward?

I have a solicitor working on my parents 300K house sale but they are not aware of the grandparents 400K house. I'm worried if I tell the solicitor it will open a can of worms.

Flugelhorn

Just thinking about this - the 400K house was inherited by your father and aunt (even though they have not administered it)   - as your father predeceased your mother, his estate would have passed to her (mostly) - then presumably it would have passed to you on her death

IF your father had predeceased his parents then the assets from 50% of 400K house would have come directly to you - but that is not the case here 

there are complexities before anyone can sell the 400K house like you may have to put in IHT returns for them all and they may look at people not declaring assets while claiming benefits - these factors will still be relevant if you wait 5 years 

Keep_pedalling

Sorry but deliberately not winding up an estate to avoid losing means tested benefits is benefit fraud and you are likely to see a demand from DWP when your parents estates are wound up to pay the money back plus penalties. 

You should not let this drag on any longer. Who is living in your grand parent’s house now? Are they paying rent? 

runner1977

Keep_pedalling said:

Sorry but deliberately not winding up an estate to avoid losing means tested benefits is benefit fraud and you are likely to see a demand from DWP when your parents estates are wound up to pay the money back plus penalties. 

You should not let this drag on any longer. Who is living in your grand parent’s house now? Are they paying rent? 

Thanks - I would like to get it all sorted. Grandparents house is empty now. No plans to rent it out. Just want to get rid of it all ASAP TBH

Keep_pedalling

runner1977 said:

Keep_pedalling said:

Sorry but deliberately not winding up an estate to avoid losing means tested benefits is benefit fraud and you are likely to see a demand from DWP when your parents estates are wound up to pay the money back plus penalties. 

You should not let this drag on any longer. Who is living in your grand parent’s house now? Are they paying rent? 

Thanks - I would like to get it all sorted. Grandparents house is empty now. No plans to rent it out. Just want to get rid of it all ASAP TBH

In which case you have a massive task on your hands. If your grand parents owned the house as joint tenants then you will probably not need probate for your grandmother. You need it for both your grandfather and your father and because they both died before 1st Jan 2022 you are going to have to do an IHT return for both of them as well (IHT205 rather than IHT I think). Unless your mother’s estate exceeds £650k you should be able to get away with only having to apply for probate. 

You are going to have to work through this in the order of the deaths to establish the actual estate values of the latter deaths.

Assuming both properties were held as joint tenants, the intestacy rules would have worked as follows. 

On your grandmother’s death, ownership of the house would pass to her husband, as would all her savings as it sounds like those were only small.

On your Grandfathers death his estate would be split 50/50 with his 2 children.

On your fathers death, again the house would pass to your mother, and the first £250 or £270k (depending on the actual date of his death)  of his remaining estate would go to his wife. If his inheritance from his parents took it over that value then the remaining amount would be split 50/50 with his wife and his children.

One final point, please break the family tradition and make a will if you don’t already have one. 

RAS

Who is paying the CT and utility bills on the houses? Hopefully they are insured? By whom?

If these properties are not occupied, then the estate will likely get hit by empty property CT penalties sooner rather than later.

runner1977

Thanks for the information @Keep_pedalling
Sounds like I'm going to have to let the solicitor know about both houses/estates and work through them.

Next problem will be that I'm not an executor for my grandparents estate - I think only my Aunty is and she won't want to do it.

From my basic googling I may have to apply to the courts to force probate/winding up of grandparents estate.

Fortunately my Aunty lives on the other side of the country and I rarely see her so any awkwardness will be kept to a minimum!

I do have a will - back in 2017 I saw what was happening and thought "this is going to turn into a right mess" so I sorted my will

Keep_pedalling

Keep_pedalling said:

runner1977 said:

Keep_pedalling said:

Sorry but deliberately not winding up an estate to avoid losing means tested benefits is benefit fraud and you are likely to see a demand from DWP when your parents estates are wound up to pay the money back plus penalties. 

You should not let this drag on any longer. Who is living in your grand parent’s house now? Are they paying rent? 

Thanks - I would like to get it all sorted. Grandparents house is empty now. No plans to rent it out. Just want to get rid of it all ASAP TBH

In which case you have a massive task on your hands. If your grand parents owned the house as joint tenants then you will probably not need probate for your grandmother. You need it for both your grandfather and your father and because they both died before 1st Jan 2022 you are going to have to do an IHT return for both of them as well (IHT205 rather than IHT I think). Unless your mother’s estate exceeds £650k you should be able to get away with only having to apply for probate. 

You are going to have to work through this in the order of the deaths to establish the actual estate values of the latter deaths.

Assuming both properties were held as joint tenants, the intestacy rules would have worked as follows. 

On your grandmother’s death, ownership of the house would pass to her husband, as would all her savings as it sounds like those were only small.

On your Grandfathers death his estate would be split 50/50 with his 2 children.

On your fathers death, again the house would pass to your mother, and the first £250 or £270k (depending on the actual date of his death)  of his remaining estate would go to his wife. If his inheritance from his parents took it over that value then the remaining amount would be split 50/50 with his wife and his children.

One final point, please break the family tradition and make a will if you don’t already have one. 

There are no executors when someone dies without a will, any of the near relatives can take on the administration in order to for your parents estates you need to also get your grandparents estates sorted so you are entitled to administer their estates. 

Marcon

runner1977 said:

Does anyone have advice on a way forward?

I have a solicitor working on my parents 300K house sale but they are not aware of the grandparents 400K house. I'm worried if I tell the solicitor it will open a can of worms.

Yes. Ask your solicitor, AFTER giving them all relevant facts. People are all too quick to complain about solicitors, but sometimes the client makes me despair. What do you think will happen if you don't give your solicitor all relevant facts?

RAS

runner1977 said:

Does anyone have advice on a way forward?

I have a solicitor working on my parents 300K house sale but they are not aware of the grandparents 400K house. I'm worried if I tell the solicitor it will open a can of worms.

I presume you have got probate/administration sorted for your parents? As you can't sell the house otherwise. 

There's a whole load of possible issues round IHT which needed to be paid promptly, although based on house values, may not be an issue.

Your grandfather's will appears to have created an IPDI trust in your mother's favour, with you as remainderman. So the property may have been held as tenants in common? That is good for you.

Then there's the issue of CGT on both houses.

By delaying the sale of her parent's house, your aunt has replaced a very likely nil IHT bill with a large and increasing CGT bill for which the estate will be liable as neither of you have occupied the house and your mother wasn't your grandparent's descendant, substantially reducing both inheritances. 

The situation is regarding CGT for your parent's house it may only be payable on the increase since her death.

So you need to talk to your solicitor, as whoever got probate for your father probably failed to account for the estate.

 

Keep_pedalling

RAS said:

runner1977 said:

Does anyone have advice on a way forward?

I have a solicitor working on my parents 300K house sale but they are not aware of the grandparents 400K house. I'm worried if I tell the solicitor it will open a can of worms.

I presume you have got probate/administration sorted for your parents? As you can't sell the house otherwise. 

There's a whole load of possible issues round IHT which needed to be paid promptly, although based on house values, may not be an issue.

Your grandfather's will appears to have created an IPDI trust in your mother's favour, with you as remainderman. So the property may have been held as tenants in common? That is good for you.

Then there's the issue of CGT on both houses.

By delaying the sale of her parent's house, your aunt has replaced a very likely nil IHT bill with a large and increasing CGT bill for which the estate will be liable as neither of you have occupied the house and your mother wasn't your grandparent's descendant, substantially reducing both inheritances. 

The situation is regarding CGT for your parent's house it may only be payable on the increase since her death.

So you need to talk to your solicitor, as whoever got probate for your father probably failed to account for the estate.

 

The OPs grandfather died intestate so no IPDI trust involved. Absolutely agree about the solicitor they need to be aware of the entire picture as the grand parents estates impact the parents estates.