Executor/beneficiary wanting to ‘buy out’ others from property in Will

[Grassmarket]

As sole executor, I’m confused by the differing legal advice I’ve received to date on how I should ‘buy out’ my fellow beneficiaries from the property in my father’s estate.

Background: 3 sibling beneficiaries - each inherits different proportions of total estate. Main asset is a house, plus other significant cash assets. As executor & main beneficiary, I want to keep the house, ie ‘buy out’ the others by giving them their share of estate in cash - topped up with some of my own funds. They are in agreement with this. But how to do it correctly?

I had been told previously (by Which? Legal & Money advisers) that I was effectively ‘buying’ the house from the estate - & the ‘price paid’ was equal to the top-up amount from my own funds. This top-up amount would then be subject to stamp duty. However, when consulting a local solicitor about my own will, they advised differently. They said that as a beneficiary there is no house sale or stamp duty involved. Instead, they advised that when I have the Grant I can simply gather assets, prepare/agree estate accounts with siblings, then give them their share in cash (plus my top-up) & finally transfer the house into my name.

So which advice is correct? I simply want to do it legally, fairly - & not get a nasty tax bill down the line if I do it wrong! The house will not be my main residence - my spouse & I own our own house too. Longer-term (post pandemic) we plan to sell both houses, but not for a year or two until things hopefully settle down.
I’m quite happy to pay for the relevant advice to do it right, but not sure if I need a solicitor, tax accountant or IFA!

Please point me in the right direction if you can - thanks.

[des8]

Your solicitor is correct.
As executor you collect in the assets and value them.
You then, having obtained beneficiaries agreement to the accounts, pay the beneficiaries their share including top up.
As executor you then pass the house to yourself as beneficiary.
As no sale there is no stamp duty or land tax or whatever to pay.

[Grassmarket]

Many thanks for clarifying that, DES8.
Another related question I’m not sure about is: should the value of the house I use to calculate everyone’s share of the estate be identical to the value declared in Probate?
By not selling the house, we all avoid the usual costs, delays & possible price reductions of selling on the open market. Is it fair for me to reflect that in the price I pay for the house? If so, how should I present that in the Estate accounts - as a slightly lower house value, or in some other way?

[des8]

The money obtained when the house is sold is the amount that is divided between the beneficiaries.

If that value is so different that it affects the amount of any IHT that should be paid, HMRC would need to be notified.

Surely the way forward is by written agreement between you all as to what is a fair price taking into account valuations and the savings to be made by you purchasing it ?
That price is what is entered into estate accounts