Distribution of assets according to will.

[Martyn2]

I have just accepted being an executor and have the following situation. There are only two beneficiaries, who share the estate equally. The estate consists of a house and a little cash. One person wants the house and is willing to give his cash share plus the proceeds from selling his own property to the other to reach the equal share situation. Are there any tax or legal problems with this?

[james_law]

Being an executor of a will you owe some legal obligations and one being in this situation to get the highest possible price for the house. The executor should obtain a valuation for the house. You sell the at the valuation to the beneficiary who wants to buy it and then proceeds of sale along with the other money will be split 50/50.

Im not sure what would happen if the other person objects to this but i assume this is not the case here? The only issue i can see is that you dont have the cash ready available, are you able to get a mortgage? Again not sure if there is time limits etc on distributing the estate.

Then obviously you have to pay the costs of conveyance of the house, probably might be a good idea to have the solicitor deal with the sale of both properties.

[Martyn2]

Both parties are in agreement that, rather than sell the house ( with all the expense incurred), one would sell their house and use the proceeds to make up to 50% the bequest to the other party. My worry is that this would be treated as a sale rather than an arrangement between the two people involved.

[james_law]

I'll tag Peridot as they probably will be able to help you.

[Peridot]

Hi Martyn2,

It sounds like a sensible arrangement. The only issue is how the property is dealt with pending the sum being available to pay the other residuary beneficiary their share once the current residence of the beneficiary has been sold. Do they have a buyer?

A Deed of Variation to the Will could be prepared provided this is done within 2 years of the Grant of Probate being issued which leaves the property to the one beneficiary and provides a cash sum to the other but you would need this drafted by a lawyer ensuring the payment and transfer of the property happen effectively simultaneously or there is some provision for the money to be provided to the cash receiving beneficiary that is legally binding and has time scales attached to it.

Has the rest of the estate been dealt with and have you obtained the Grant yet?

[Martyn2]

I am just about to post the probate forms so have not obtained the grant yet. The eventual property owner has not sold his property yet and the agreement would be that at the point I receive the grant he would have responsibility for all outgoings on the property left in the will until he gains sole ownership. My main concern is the fact that money paid to the second beneficiary will not all come from the proceeds of the bequest and I was concerned it would be treated as a sale rather than just an ownership transfer using form AP1. Thank you for your reply so far.

[Peridot]

Hi Martyn2,
IMO as executor you should protect yourself. The executor is responsible for the security of the property and preservation of the assets until the estate has been administered fully. How the estate is distributed ie if a residuary beneficiary is 'buying out' another that is up to the agreement you reach with the beneficiaries. However I would be inclined to retain control of the property (including insurance etc) until such time as the other property is sold and the money transferred to the estate to then distribute the house to the one beneficiary and the money to the other (or make arrangements for simultaneous transfer/completion date in respect of the property and money transfers). The costs of insurance would be payable from the estate. As I mentioned a Deed of Variation may be the most sensible way to do this. The estate property would be a transfer only but the other beneficiary (and executor) need protection to ensure they receive and can evidence how the estate has been dealt with.

You would need the Deed prepared which would be in the region of £350 plus VAT I would estimate, but well worth the money to protect all concerned and ensure there is no comeback. Has the beneficiary started marketing their house yet?

[Martyn2]

Thank you for your great advice, it has certainly given me a lot to think about. This is especially true, because the beneficiary lives in Switzerland, lets his house out in the uk, with the tenancy agreement not up, until October this year.

[Peridot]

Hi again,

Provided the Deed of Variation is completed within 2 years of the Grant it operates the same as if the Will had originally been written in those terms. You do need to get some advice in my opinion and remember to ensure as an executor you are protected too. Most people are reasonable and nothing untoward happens when agreements are reached, however there is always the odd occasion when things don't quite go to plan and then you could be found personally liable for the resulting issues.

[Martyn2]

Things have moved on since my last posts. There has now been an agreed sale of the estate property and the buyer is asking for an exchange of contracts and completion date. The second executor has now come on board by exercising his notice of Power Reserved. However he is refusing to sign any documentation relating to the sale until I agree to his claimed executor expenses. In previous posts there was general agreement that his claims were non sustainable. I see the sale of the house and his claims, as two separate issues. Am I right?* Can he refuse, to what amounts to negation of the terms of the will purely on this basis?

[des8]

I think the answer lies in posts 4 & 6* on this thread*https://legalbeagles.info/forums/for...nised-executor

As an aside it would be easier for others if you could keep to one thread please