Help please with probate/ Letters of Administration claim

RoNan

thank you for all your helpful replies

Savvy_Sue

RoNan said:

The other siblings/beneficiaries - 2 are homeowners living in their own properties , a third rents , leaving a fourth which they wish to remain living at the family home .

Our reason for asking the question is that the two non-owners will lose any entitlement to First Time Buyer benefits, because they will have held 1/4 share in this property, if they wish to buy in the future. 

And all those not living there will a) potentially incur a Capital Gains Tax Liability when the house is sold in the future; b) not receive any meaningful inheritance for the foreseeable future; c) face potential difficulties if they ever need to claim benefits or go through the divorce courts. 

You may have very good reasons (perhaps linked to the agricultural tie-in) for the arrangements you're all considering, but you should be aware that it may create many more complications at some point in the future. Who decides what maintenance is needed, and how should that be paid for? just as an example. 

RAS

Putting the property into joint names has all sorts of implications for each of the siblings. You each and jointly need to take legal advice before you do anything. It's a minefield.

You will all need to make wills detailing what happens to your shares and that impacts on further generations. 

We've a live thread here where an estate is insolvent and the deceased owns a 25% share in a property , the value of which will need to be paid to the OR sooner or later. 

We've also had a recent thread when siblings were gifted a house (still occupied by the parents) and one sibling is now divorcing so the ex is entitled to a share of the property value.

Not to add the loss of FTB status for the renting sibling, and the additional SDLT they will pay on any future home they buy.

And the impact on benefits claims.

Plus CGT implications.

Others here may be aware of other issues and possible solutions.

Keep_pedalling

Savvy_Sue said:

RoNan said:

The other siblings/beneficiaries - 2 are homeowners living in their own properties , a third rents , leaving a fourth which they wish to remain living at the family home .

Our reason for asking the question is that the two non-owners will lose any entitlement to First Time Buyer benefits, because they will have held 1/4 share in this property, if they wish to buy in the future. 

And all those not living there will a) potentially incur a Capital Gains Tax Liability when the house is sold in the future; b) not receive any meaningful inheritance for the foreseeable future; c) face potential difficulties if they ever need to claim benefits or go through the divorce courts. 

You may have very good reasons (perhaps linked to the agricultural tie-in) for the arrangements you're all considering, but you should be aware that it may create many more complications at some point in the future. Who decides what maintenance is needed, and how should that be paid for? just as an example. 

That was exactly why I asked. The sibling who does not already own a property is going to be hit with an additional 5-8% (depending on which part of the UK) tax if they finally buy their own place because it will be classed as a second home. Inheriting a portion of a house with no possibility of benefiting from it, is not something I would be willing to do. Would it not be possible for the person living there to at least buy out that siblings share so that they could have a decent deposit for their own place without the additional tax burden?

poseidon1

I thought it wise to look into the implications of  the Agricultural occupancy condition  from the point of view of valuation, occupation rights and effect on co owners who do not meet the occupancy conditions. The following blog was the result - 

https://zoenapier.com/planning/agricultural-occupancy/#:~:text=What Is an Agricultural Occupancy,changes its operations or ownership.

OP after reading this, it's  clear to me valuation of properties subject to this agricultural tie is highly specialised so forget about approaching conventional estate agents and even the average RICS valuer may find this outside their sphere of competency.  The blog indicates how you may ascertain an acceptable probate valuation from specialists in this sector.

It appears a substantial discount factor may apply which may place the value well below £635k you have quoted unless that figure incorporates the 20 to 40% discount you mention. If £635k is the pre discount figure, on the surface there may be no need for your father's residence nil rate band, which as advised will eventually simplify the probate application.

Going forward, I assume the occupying sibling will meet the agricultural tie condition and actually work in agriculture? If so, have you collectively discussed how that sibling can release capital from the property to pay off the other siblings inheritance shares? I suspect if the occupying sibling's job is not particularly well paid, they may struggle to raise sufficient mortgage finance for a buy out excercise.

As mentioned by other posters, the other sibling who currently rents, will find any future home purchase by them will attract 2nd property stamp duty, so they will be notably disadvantaged by your joint plans to retain joint ownership of the family home going forward. 

RoNan

Thanks all for your further helpful replies - much appreciated .

As it was using an online valuation tool there was no facility to add detail of the AOC so i can only  presume that figure of 635K is likely ( pending further investigation)  to be  reduced as Poseidon1 outlined above .