residuary estate

[flustered]

We have an awkward executor one of two managing my grandfather and grandmother's estate. My aunt and uncle

My uncle is very direct and straight to the point. Nasty sort of chap but everything he does he records and sends copies to all the beneficiaries (including the other executor ).. absolutely everything is above board.

My aunt who has been so lovely in the past that is a different matter. We have information that she is selling part of the residuary estate. We have confirmed it.

Items which have been sold are valuable but also hold a copyright.

My uncle is going to see a solicitor next week and seeing about getting her removed as an executor. Absolutely livid as he wanted these items divided equally, knowing they were of value, not just monietry but sentimental as well.

My aunt denied this.. then has refused to speak to anyone .

I suppose our questions are...

can copyright items be sold by one executor and that copyright transfered to the new owner?

Can we refund the purchasers, or as many as we can find and have them return the items?

What is the worst case scenario if she does not hand over profit from sold items to the estate?

My uncle does not want her penalised, but obviously he cant lie or omit on probate! Or can he add a disclaimer saying that the other executor dealt with xyz etc?

[james robertson]

Re: residuary estate

The Executors are personally liable for everything in the estate, you uncle can't disclaim responsibility for what your aunt has done. to remove her as executor can only be done by going to court. Also to force her to account for items disposed of would also require court action. Probate might not be granted without accounting for the items disposed of by you aunt. I would advise your uncle to obtain Executor liability insurance if he can.

[Kati]

Re: residuary estate

[MENTION=85500]Peridot[/MENTION] ... have you any advice here??

[Peridot]

Re: residuary estate

Hi Flustered,

Sorry to hear this. It is very difficult when executors appear to start warring!
If I understand correctly your Aunt who is a co-executor with an Uncle has sold some of the assets of the estate. Your Uncle had previous designs on the items and had intended to distribute them to various people. I assume that the items had not been left to specific people in the Will, they were meant to make up part of the estate, to be sold and divided between residuary beneficiaries.

Had the items been formally valued already? If so why did your Aunt not know about this if she is co-executor? If they hadn't been valued how does your Uncle know they were more valuable than the amount your Aunt got for them?

As executors they are both under a duty to deal correctly with the estate, this includes 'valuing' the assets for the purposes of inheritance tax calculations and also in order to obtain the Grant of Probate as well as distributing them according to the Will.

The fact that your Aunt would appear to have sold some assets is not an issue in itself provided the amount she received is about the valuation they were given and they had not been bequeathed to any individuals under the Will. In the usual course of events items are sold and then the monies held by the executors until the distribution is made, so once all debts, tax, funeral costs etc are dealt with.

The executors are personally liable for any issues with regard to the inconsistency in values and money obtained if sold, however, unless the copyright items were actually left to individuals then your Uncle also doesn't have the right to decide who gets what either. Unless the items are to go to someone specifically under the Will, then technically the items should be sold and the monies distributed as per the Will.

I'm not sure if this is more about your Uncle maybe wishing to make the decisions about what goes to who and feeling he has been usurped or whether there is in fact a potential problem in that the value of the copyright items was significantly more than was received for them. In which case the executors would have to deal with this as they are personally responsible for ensuring items are dealt with correctly and that expensive items are not sold at an undervalue. However, it is all dependent on whether the money received is significantly less than the likely value expected in the valuation (that I assume would have been obtained for the purposes of completing the tax forms).

If the sum received is not significantly different from the valuation obtained, then what would be the point in going to Court, using estate money to deal with the issues and thus reducing the 'pot' to be paid to the residuary beneficiaries anyway. The items have gone, which may be sad for your Uncle or whoever thought they were going to receive them, but if they were not specifically left to someone then this is a non issue.

If that is not the case and the items have been sold at a significant undervalue then it would be worth weighing up the amount lost by the cost of going to Court. As James Robertson pointed out it also costs to go to Court to have an executor removed from the Grant, again reducing the pot. But is this really what the family and executors want to happen. Not only is the cost an issue but also the delay in finalising the estate will be considerable.

I am afraid I am not an expert in copyright, unless the items had significant value which can be demonstrated by an independent valuation from an expert in these matters (which should have happened before Probate was obtained, if the items are valuable), then it may be worth seeing what amounts are being alleged and seeing if there is a way either your Aunt can deal with a shortfall, or get the items back if the purchasers are willing? If the executors did not get valuations how does Uncle know the value?

Rather than going to the solicitors straightaway would it be better if maybe the executors could communicate with each other about this, through a middle person, if necessary. Until you actually know what amounts are being dealt with and whether there is in fact a shortfall it seems a bit sledgehammer and nut if they have managed to get this far with no issues. I don't mean to make light of the situation and potentially it is serious but I think some of the facts need establishing first before going off half cocked over something that may not be as much of an issue as you thought.

The main points -
What and where are the valuations?
Were the items left to specific people or were they to be sold and divided as part of the residue of the estate?
How much was received for the items by Aunt and is there a shortfall?
Is there a way any shortfall can be made up (based on the valuation - if no valuation can't make up to a figure you don't know, but why wasn't one obtained if the items were known to be valuable?)
If there was no valuation prior to obtaining the Grant and settling any tax due, then the items were not deemed to be sufficient valuable at that point?
If they were valuable and no valuation was obtained then make sure that a corrective account is supplied to HMRC so that any inheritance tax can be recalculated.

More questions that answers I'm afraid but maybe it will help focus on what needs to be decided now.

[flustered]

Re: residuary estate

Hi thanks for the replies.

All residuary was to be equality spilt.

The items had not been valued.

We naively did not think they were worth it, though it's still early days and everything is still being processed. So only obvious items like their home have been taken into consideration.

Initially we decided as a family they would be gone through and spilt equally because they are of interest, but believed that to be sentimental. The aunt was present and readily agreed this too.

The discovery of them being valuable was made on their sale.

On further discussions after this came about, there is no fair spilt because some items are worth more than others, and is based in what someone is willing to pay for them. The price achieved could be considerably higher or lower.

On speaking to a valuer they could be worth as little as 5k or as much as 50k as an entire collection (only a telephone conversation). Based on previous items sold. We did not tell him of the circumstances.

At present by the quantity sold. It would appear 15k has been made. She is denying having the items and has stopped selling them, or at least that we can see. It probably accounts for no more than 1/5th of the total amount. So no shortfall on rough valuation.

It could possibly be clawed back from the rest of the estate. Depending on what it goes for.

[Peridot]

Re: residuary estate

Hi Flustered,

Apologies for the delay I have not been on the forum for a few days.

Has the Grant actually been obtained yet? If not then it would not be a case of removing your Aunt as executor anyway. She could decide not to accept the appointment or to have power reserved to her. This would be done in the Oath of the Executors which is needed to obtain the Grant. If the Grant has been obtained then I still wouldn't recommend having your Aunt removed from the Grant. It is a lot of money for something that I believe can be sorted by the executors and beneficiaries, provided they communicate.

If there is no Grant as yet, then I assume that the tax forms are still in the process of being completed. I would suggest formal valuations being obtained on the remaining items for the purposes of IHT forms. I definitely wouldn't trust the telephone conversation. The items need to be seen to be valued correctly. It may be that they are not as valuable as the valuer thought, on seeing them. In addition, not only is it about the price someone would be willing to buy them for but also what is fashionable at the time. Somethings we may believe should be worth a considerable amount often aren't as no-one wants the item, hence the value is far less than we anticipate.

I would recommend a specialist valuation, if you are certain they are worth significantly more than previously thought. However, if this is not the case, a usual auctioneer value should be sufficient for IHT purposes.

I am confused as to how it has been established the items are more valuable and who has sold them, bearing in mind they were to be distributed for sentimental reasons? The people who received the items are they all beneficiaries anyway? In which case the value of their items could be deducted from the amount they are due to receive, a sort of interim payment for the legacy they are due to receive eventually?

Has your Aunt confirmed she still has the remaining items that can be valued now? Does she still have the money from the sales? The money raised still belongs to the estate until it is distributed so should be included. Maybe once you have had the other items valued you find there is not such a short fall as you anticipated?

I suppose as far as your Uncle is concerned, it appears that the items vary in value so there was never going to be an easy way to divide them equally. As I indicated above, if the people who received the items (and subsequently sold them) are beneficiaries in any event then the amount they received, whether that be the value of the item itself or the amount they received upon sale, the figure could be deducted from the final distribution due to them.

If the people who received the items are not beneficiaries themselves then this could be more difficult, but it would be sensible to see if they would reconsider their 'purchase' and either return the item upon return of their money or at least allow it to be valued for the tax calculation? Trying to think a little outside the box as to ways this can be dealt with, without the family getting into arguments.

Hopefully this can be sorted to enable matters to move on.