One Property for Each of Two Beneficiaries, One Sold, One Transferred - Timing Differences Query

Savvy_Sue

All I know is that if HMRC decide to query the probate value, you'll do better if you're backing up the value you used with a formal RICS valuation than a 'let's stick a finger in the wind and see' valuation from an estate agent. 

Keep_pedalling

numbersrule said:

We have now consulted one of the RICS surveyors who provided Probate Valuations and true to form they have said that sometimes properties sell for more and sometimes they sell for less so it is impossible to provide a 'True Market Value' in any formal way.

But this brings me back to my OP.  What is the regulatory guidance on this situation? Surely this must be a reasonably regular occurrence.  Is there no guidance from the accounting profession or from RICS?

Not sure what you mean by regulatory guidance, there is no such thing. If a house sells for more than the valuation then either the valuation was wrong or, more likely, the buyer had competition and offered over the asking price to secure the purchase.  A valuer cannot factor in random things like two people getting into a biding war that pushes up the sale price. 

This is very common situation, but what is not common is a will that leaves individual properties to different beneficiaries with a complicating letter of wishes that has no legal standing. One of the beneficiaries has got lucky with the sale of their inherited property and legally all the gain (and CGT liability) is theirs. 

numbersrule

Keep_pedalling said:

numbersrule said:

We have now consulted one of the RICS surveyors who provided Probate Valuations and true to form they have said that sometimes properties sell for more and sometimes they sell for less so it is impossible to provide a 'True Market Value' in any formal way.

But this brings me back to my OP.  What is the regulatory guidance on this situation? Surely this must be a reasonably regular occurrence.  Is there no guidance from the accounting profession or from RICS?

Not sure what you mean by regulatory guidance, there is no such thing. If a house sells for more than the valuation then either the valuation was wrong or, more likely, the buyer had competition and offered over the asking price to secure the purchase.  A valuer cannot factor in random things like two people getting into a biding war that pushes up the sale price. 

This is very common situation, but what is not common is a will that leaves individual properties to different beneficiaries with a complicating letter of wishes that has no legal standing. One of the beneficiaries has got lucky with the sale of their inherited property and legally all the gain (and CGT liability) is theirs. 

Yes, agreed, all the gain is B1's.  However, B1 receives a lesser share of the Residue effectively halving the gain.

This enables the LOW to be complied with even though it seems unfair to B1.

In light of a different thread currently in progress entitled 'How to amend Probate values?' we will not be finalising anything until we have written to HMRC regarding the Capital Gain.  In case that changes the Probate Value.

mybestattempt

numbersrule said:

Keep_pedalling said:

numbersrule said:

We have now consulted one of the RICS surveyors who provided Probate Valuations and true to form they have said that sometimes properties sell for more and sometimes they sell for less so it is impossible to provide a 'True Market Value' in any formal way.

But this brings me back to my OP.  What is the regulatory guidance on this situation? Surely this must be a reasonably regular occurrence.  Is there no guidance from the accounting profession or from RICS?

Not sure what you mean by regulatory guidance, there is no such thing. If a house sells for more than the valuation then either the valuation was wrong or, more likely, the buyer had competition and offered over the asking price to secure the purchase.  A valuer cannot factor in random things like two people getting into a biding war that pushes up the sale price. 

This is very common situation, but what is not common is a will that leaves individual properties to different beneficiaries with a complicating letter of wishes that has no legal standing. One of the beneficiaries has got lucky with the sale of their inherited property and legally all the gain (and CGT liability) is theirs. 

Yes, agreed, all the gain is B1's.  However, B1 receives a lesser share of the Residue effectively halving the gain.

This enables the LOW to be complied with even though it seems unfair to B1.

In light of a different thread currently in progress entitled 'How to amend Probate values?' we will not be finalising anything until we have written to HMRC regarding the Capital Gain.  In case that changes the Probate Value.

Regardless of any changes to the date of death values of the properties, I think you are not making the distinction between the specific gifts of the properties and the residual estate which comprises of the other assets of the deceased.

 @Keep_pedalling has pointed out the properties are not any part of the residual estate. 

Your difficulty appears to have arisen because legal ownership of the "Main Residence" property was not transferred to B1 before it was sold and the sale proceeds are held by the executor(s)?

Keep_pedalling

mybestattempt said:

numbersrule said:

Keep_pedalling said:

numbersrule said:

We have now consulted one of the RICS surveyors who provided Probate Valuations and true to form they have said that sometimes properties sell for more and sometimes they sell for less so it is impossible to provide a 'True Market Value' in any formal way.

But this brings me back to my OP.  What is the regulatory guidance on this situation? Surely this must be a reasonably regular occurrence.  Is there no guidance from the accounting profession or from RICS?

Not sure what you mean by regulatory guidance, there is no such thing. If a house sells for more than the valuation then either the valuation was wrong or, more likely, the buyer had competition and offered over the asking price to secure the purchase.  A valuer cannot factor in random things like two people getting into a biding war that pushes up the sale price. 

This is very common situation, but what is not common is a will that leaves individual properties to different beneficiaries with a complicating letter of wishes that has no legal standing. One of the beneficiaries has got lucky with the sale of their inherited property and legally all the gain (and CGT liability) is theirs. 

Yes, agreed, all the gain is B1's.  However, B1 receives a lesser share of the Residue effectively halving the gain.

This enables the LOW to be complied with even though it seems unfair to B1.

In light of a different thread currently in progress entitled 'How to amend Probate values?' we will not be finalising anything until we have written to HMRC regarding the Capital Gain.  In case that changes the Probate Value.

Regardless of any changes to the date of death values of the properties, I think you are not making the distinction between the specific gifts of the properties and the residual estate which comprises of the other assets of the deceased.

 @Keep_pedalling has pointed out the properties are not any part of the residual estate. 

Your difficulty appears to have arisen because legal ownership of the "Main Residence" property was not transferred to B1 before it was sold and the sale proceeds are held by the executor(s)?

That should not be a problem, a beneficiary is entitled to request the sale of an asset left to them and to receive the proceeds of that sale, it does not change the residual estate or how that should be distributed. 

Where one property is sold and one is kept it is impossible to come up with a ‘fair’ formula as no one knows what the unsold property would actually make on the open market. The decision in then end is with the beneficiary of the sold house if they are happy to give up part of their profit then it is entirely down to them to say what that is they do not have to negotiate with the other beneficiary over this. 

The moral of this story is to draft your will carefully and not to try and make major changes via a letter of wishes. The testator or in this case has created a cause of conflict between the beneficiaries and it could have been a lot worse if one of the properties had been sold before they died. 

mybestattempt

Keep_pedalling said:

mybestattempt said:

numbersrule said:

Keep_pedalling said:

numbersrule said:

We have now consulted one of the RICS surveyors who provided Probate Valuations and true to form they have said that sometimes properties sell for more and sometimes they sell for less so it is impossible to provide a 'True Market Value' in any formal way.

But this brings me back to my OP.  What is the regulatory guidance on this situation? Surely this must be a reasonably regular occurrence.  Is there no guidance from the accounting profession or from RICS?

Not sure what you mean by regulatory guidance, there is no such thing. If a house sells for more than the valuation then either the valuation was wrong or, more likely, the buyer had competition and offered over the asking price to secure the purchase.  A valuer cannot factor in random things like two people getting into a biding war that pushes up the sale price. 

This is very common situation, but what is not common is a will that leaves individual properties to different beneficiaries with a complicating letter of wishes that has no legal standing. One of the beneficiaries has got lucky with the sale of their inherited property and legally all the gain (and CGT liability) is theirs. 

Yes, agreed, all the gain is B1's.  However, B1 receives a lesser share of the Residue effectively halving the gain.

This enables the LOW to be complied with even though it seems unfair to B1.

In light of a different thread currently in progress entitled 'How to amend Probate values?' we will not be finalising anything until we have written to HMRC regarding the Capital Gain.  In case that changes the Probate Value.

Regardless of any changes to the date of death values of the properties, I think you are not making the distinction between the specific gifts of the properties and the residual estate which comprises of the other assets of the deceased.

 @Keep_pedalling has pointed out the properties are not any part of the residual estate. 

Your difficulty appears to have arisen because legal ownership of the "Main Residence" property was not transferred to B1 before it was sold and the sale proceeds are held by the executor(s)?

That should not be a problem, a beneficiary is entitled to request the sale of an asset left to them and to receive the proceeds of that sale, it does not change the residual estate or how that should be distributed. 

Where one property is sold and one is kept it is impossible to come up with a ‘fair’ formula as no one knows what the unsold property would actually make on the open market. The decision in then end is with the beneficiary of the sold house if they are happy to give up part of their profit then it is entirely down to them to say what that is they do not have to negotiate with the other beneficiary over this. 

The moral of this story is to draft your will carefully and not to try and make major changes via a letter of wishes. The testator or in this case has created a cause of conflict between the beneficiaries and it could have been a lot worse if one of the properties had been sold before they died.  

I think we are in agreement here.

On reflection, perhaps I was unclear, but my point was that any perceived unfairness may seem more apparent and difficult to reconcile because the executor(s) may have received the sales proceeds rather than the sales proceeds being paid directly to the beneficiary. 

numbersrule

mybestattempt said:

I think we are in agreement here.

On reflection, perhaps I was unclear, but my point was that any perceived unfairness may seem more apparent and difficult to reconcile because the executor(s) may have received the sales proceeds rather than the sales proceeds being paid directly to the beneficiary. 

I take your point, and we knew there was a decision to be made about whether the Main Residence should be transferred to B1 and dealt with outside the Estate Admin or whether it should be sold within the Estate.

The decision was made in full knowledge of the options.

Remember, if it had been Transferred prior to sale and then had struggled to sell or sold at less than Probate Value then B1 would have incurred the full loss rather than it being shared within Probate.  B1 opted for shared risk and shared opportunity.

You takes your choice and you live with it.

Who knows,  next week the buyer might give backword and pull out.

I am not genetically predisposed to regrets.  This is about looking forward.