Death of a Joint Executor before Probate completed

[Pezza54]

What you are forgetting is that that the grandchild or grandchildren that want to take up the role of executor to their grandfather's estate must first be appointed personal representative to their mother's estate.
You believed that the grandchildren would either inherit their mother's estate in equal shares under the will or intestacy rules. What if the solicitor transfers sale proceeds as post 14 and the mother's will is subsequently found and states differently (to the whole of her estate passing to her children in equal shares)
One or both of the grandchildren should apply to Probate to take on the personal representative role and be responsible for trying to find their mother's will and if they are unable to find one, confirming their mother's estate is to be distributed in accordance with intestacy rules
This may cause a delay to the distribution of funds if the sale goes through quickly
Executors have a duty to inform beneficiaries about administration progress of the estate so your wife may decide to warn beneficiaries there may be a delay while the grandchildren apply for probate/letters of administration

[Northern Guy]

No I hadn't forgotten the fact that the grandchildren will need someone to obtain probate for their late mother, even if they are entitled under any Will or else intestacy to inherit. That person will need probate to collect the deceased mother/stepsister's share, I realise my solicitor can't simply hand it over to someone who doesn't have probate for the stepsister, on the basis of an assumed distribution which as you rightly say her Will might contradict.

I was confused by what you said about contacting the grandchildren. If I understand you correctly now, the contact is mainly to remind them to obtain (themselves or via solicitor) probate or else the distribution will be delayed, at least for their half of the house proceeds if not for my wife's half. Beyond that, you are saying that there is a general need to inform/involve beneficiaries, even if my wife's solicitor seems to sidestep this in the quoted paragraph.

[Pezza54]

Your wife's solicitor believes that following the death of the co-executor your wife, as the remaining sole executor, has the authority to sign property transfer form TA1
As long as the buyer's solicitor agrees there shouldn't be a problem. There are 2 solicitors involved in the sale. The seller and buyer have to rely on their advice
If the property has increased in price since the date of death of the stepfather there may be CGT to pay on his share.

[Northern Guy]

The comment from my wife's solicitor was at commencement of conveyancing, so predated the stepsister/coexecutor's death. Yes we will have to see what the buyer's solicitors say, they've chosen one of those online national firms, not always the best in my previous experience.

I hadn't considered CGT, the probate solicitor never raised that. In the 5 years since the stepfather's death, there would have been a significant rise in the property's value, although hard to back calculate given no exact valuation at time of death, just a guess upon applying for probate 5 years later.

I am finding it hard to fathom what the CGT position might be, but it looks like for the stepfather's death in 2019, the personal representatives might get three years of £6.15k or £12.3k CGT relief? Beyond that, there's also what was until recently the £6.2k individual CGT allowances for one son, two grandchildren and one estate of recently late daughter, as beneficiaries?

That half property share might have increased £40k over 5 years at a wild guess. Not sure how such a rise will sit against the CGT allowances above, if correct?

[Pezza54]

I am by no means a tax expert, but the following is what I have read about CGT
The tax is calculated at the net gain realised when the asset is sold. The tax exempt allowance is the allowance amount appertaining to the current tax year the asset is sold
Tax exempt allowance cannot be backdated.
Who pays the CGT depends on the terms of the stepfather's will
If the stepfather's share is held in trust until his wife dies or until the property is sold then the executors/trustees are responsible for paying the tax from his estate
If his will states his share of the property passes to his children on his death, then the step-siblings are individually responsible for paying CGT on their personal gain

[Northern Guy]

His Will gives all of his estate and interest in his estate on trust to his trustees (executors). Then proceeds to give his wife a 'right to remain' and keep it in good repair, insured etc until she leaves it or dies. It then makes his trustees responsible for paying Inheritance tax in respect of his property passing under his Will.

So from what you/the Will says, the executors as trustees must pay any CGT before distribution?

I'm puzzled by the idea CGT allowance can't be backdated. If the house rose in value of £80k over 5 years, of which £40k was attributed to the stepfather's half share, what would be the rise for CGT purposes, and if it is £40k accrued over the full 5 years, why would an annual CGT allowance not apply? Otherwise, how much could be offset against the current CGT allowance if distribution is either late this tax year or early next?

[Pezza54]

Any IHT due on the stepfather's estate should have been paid within 6 months from the date of his death

I like your thinking on CGT exempt allowances accumulating each year. If a person held onto the asset for many years they could completely wipe out any CGT

From the government guidance on CGT rates and exempt allowances for 2024/25

I may be wrong, hopefully another forum user will correct me. The cgt exempt allowance for personal representatives is only £1500 (£3k if the deceased was disabled). Assuming the house rose in price £80k

£80K less sale fees, less any property improvements, x 50% (stepfather's share), less £1500 (exempt allowance), x 24% (CGT rate for personal representatives)

If the solicitor's and agents fees are £10k, £70k x 50% = £35k, less £1500 = £33,500 x 24% = £8,040 CGT

[Northern Guy]

Thanks for the calculation, which does help. I understand your caveats about tax not being your expert subject. Looking at the Will, all references to Tax being paid by the Executors are to Inheritance Tax, which as you correctly say would be payable at the start not the end of probate. But the Will does not refer to CGT. Does that raise any ambiguity about who should settle CGT, i.e. the executor in advance of distribution or the beneficiaries individually, afterwards?