Assent

[Foxybear]

Hi there.

I am trying to understand property title after someone dies. I'd love a bit of help

A father passed away and left his solely owned home to 4 adult children. The eldest daughter took the role of executor. She completed the Assent form, transferring the property into her own name - but to hold it as the executor. In section 14, she shows the transferor as her fathers name, and she is the transferee and she put "(executor)" under her name. Is this standard practice for an executor to do, to continue to hold the property?

The siblings then rented the property out. And it was sold about 7-8 months later. It was actually sold to a company set up by 2 siblings. They used a company mortgage to pay the other 2 siblings their share. The daughter deems the estate to be selling the property.

I am trying to understand it for tax purposes - to make sure what I do is right. I am of the opinion that the estate needs a tax return for rental income, and CGT since it was rented out and then transferred to the company, not the beneficiaries. I want to be sure that the completion of the assent form doesn't change the situation.

Any help massively appreciated. TIA

[Frank1]

How can the transferor of a property be a deceased person?

When the daughter took on the executor role, she became responsible for the maintenance and insurance of the property. As executor she could have rented it out until it was sold, provided she had obtained probate.

Had the daughter died when the property was owned in her her name it would have become part of her estate. She should not have done this.

Rental income is considered part of the estate before it is transferred. The executor is responsible for ensuring any taxes are paid to hmrc.

If the daughter has succeeded in ascending the property to herself before it was rented out, she is responsible for any income tax on the rent and may also be liable for CGT if the property was sold at more than the probate valuation

[Tofros]

It is acceptable for executors to transfer legal title to themselves in their capacity as personal representatives for the estate. You say the assent made clear that was the case. If the purchaser only paid enough to buy out the beneficiaries it sounds like the tax and legal position of the estate, and the stamp duty implications may be complicated so I hope it was done with appropriate legal and tax advice. The deceased has to be the transferor as they are the registered owner, they are though acting through their personal representative.

[Frank1]

There is a short video on YouTube.com "How to register a personal representative as property owner" by HM Land Registry Citizen Centre.
Forms AP1 and ID1 are used and a fee paid.
The daughter should have used these forms not AS1.

[Frank1]

When using form AP1 the executor should state their full name followed by "as executor of the estate of the late [name of deceased]"

[Frank1]

When the daughter, holding the property in her name as executor, sold it to the company (using form TR1), she should have obtained the beneficiaries agreement that the price paid (albeit they were receiving a share) was a fair market price.
If the beneficiaries did not agree and felt it was sold too cheap, they may have a claim against their executor sister

[Foxybear]

Hi Frank1 and Tofros!

I am so very sorry, I didn't get any email notifications that there were replies! Else I would have answered sooner. Thank you so much for taking the time.

I will plot out the full timeline as I understand it...

The father passed November 2023

The property was valued at £175K to £179,950K in Jan24

The grant of probate is dated Feb24 and shows £303K gross value - so no IHT.

The AP1 and AS1 were filed in May24. I have no copy of the AS1. The daughter believes the AS1 didn't name the 4 siblings, it named the her alone, as did the AP1.

The AP1 shows -

Section 3 - and x next to "whole of the title"
Section 4 - "Transfer" and the market value of the property £180K
Section 5 - Handwritten "Assent form" and "ID1"
Section 6 - Daughters name as applicant
Section 7 - Daughters name and address
Section 8 - nothing
Section 9 - Daughters name and address
Section 10 - nothing
Section 11 - nothing
Section 12 - x next to "I am not a conveyancer"
Section 13 - nothing
Section 14 - Dads name with "transferor deceased" in brackets and then underneath that is her name with "Transferee Executor/PR" in brackets

If we look at that first step in the chain, has she transferred the property to herself and taken it out of the estate (and so, she personally is liable for the IT and CGT on the rental and any gain) or is she still the executor and holding the property for all 4 of them, in her name? I am sorry, you answers seemed to be at odds... apologies if I have misunderstood that.

I am sure the siblings will have been in agreement, but I am not sure if she understood what she was doing.

The property was then rented on 01.07.24 and she collected the money in.

on 31.03.25 the property was transferred (TR1) from "her name" to the company. The TR1 form shows the same £180K market value as consideration.

As it happens, the company is owned by daughter and 1 brother. The company got a £90K mortgage to pay off the other two siblings.

She also made an adjustment to give them their share of the rental income that had been generated between 01.07.24 and the sale of the property on 31.03.25.

She saw these payouts as being their "inheritance". But, was it?

Her and the brother in the company, then have directors loan credits to account for their £45K "inheritance" share.

The company paid SDLT at that point, as expected.

Obviously from my point of view, I need to be sure HMRC get what they expect. I could be getting it all wrong, but in my mind, the AS1 has taken the property out of the estate? I cant find anything to contra that.

[Frank1]

It does sound as if she has ascented the property to herself. There was no need to include AS1 unless she wanted to ascent the property to beneficiaries as per the will. She could have drafted a deed of variation to the wil(with beneficiaries agreement) to ascent it to two beneficiaries.

A company normally pays more stamp duty when buying property because of a 3% surcharge above standard duty rates (on the whole of the property value)

The company will pay less income tax than an individual on the rental income and can offset mortgage interest.

You could check the land register to see who was named (and how) as the property owner after the father died.

[Foxybear]

Hi Frank, thanks for coming back to me.

I watched the youtube video you kindly recommended, thank you.

I am now just having a look at what she would have been asked on the AS1. I will go back to her and see if she remembers exactly what her answers were. Sometimes clients don't understand how important their answers to me are, so I will double check!! I didn't want to go back to her, until my understanding of the process was a bit clearer.

I hadn't realised until yesterday that she didn't used a solicitor for all this. She came to me to do the company accounts and things started to unfold. She had been paying the rental income into the company bank, before the property was owned by the business. I sorted the company and am now I am looking at her self assessment return.

No doubt I shall return. Thanks an absolute squillion for your help so far. I appreciate you!

[Foxybear]

Will the AS1 be available online? Can I access the property history online?

[Frank1]

Probably not You should contact the Land Registry on their helpline 0300 0060478

[Tofros]

Though unusual it is not improper for an executor to transfer the title to themselves in their capacity as PR and they will in that case hold the legal title on trust for the estate. On the AS 1 there is a box to tick if the title holder will be holding on trust and I would expect the PR to have ticked that option. If you can get a copy of the AS1 it should help. On the other hand, and not directly relevant to your query, the onward sale to their own company would be self dealing contrary to a trustee’s duties unless they had the express consent of all the other beneficiaries. If they hold as trustee on behalf of the estate then any tax due on any rental income and on and capital gain will be a liability of the estate and not the executor individually UNLESS the executor transferred the beneficial interest in the whole or part of the property to beneficiaries by way of a deed of appropriation in which case any income or capital gain would be that of the relevant beneficiary according to their share and in the case of income only from the date of appropriation.

[Foxybear]

Hi Tofros, thanks for your thoughts on this. Would the AS1 be something that Land Registry would discuss with me, if I called them? Or would the daughter need to request a copy to be sent back to her?

[Tofros]

I don’t know. One thing that strikes me is that for the Company to get a mortgage in all likelihood there would have been a contract for the sale as well as the TR1. If so, it may shed light on whether there had been an appropriation to the individual beneficiaries prior to the sale. I would be surprised if there wasn’t, otherwise the daughter and her brother would have had no beneficial interest in the equity to transfer to the company in exchange for the debt to the directors and the Company ought to have paid over to the executor the whole price not just the half. There must have been lawyers involved if there was a mortgage, even if only on the lenders side but I would be surprised if not on the borrower side even if not also on the seller side. I don’t think the executors transferred the property to herself personally. The only question I think outstanding is whether the beneficial interest passed to all the beneficiaries prior to onward sale so that any gain is apportioned between them and at what date (to apportion the income between the estate and the beneficiaries).

[Foxybear]

Hi Tofros, so sorry for not thanking you sooner. I don't get email notifications when there is a reply! The client came to the decision that the Estate didn't own the property at the time it was sold. I am sure HMRC will set us straight, if they find anything wrong with what was filed. Massive thanks for your time on this, appreciate you, and Frank1