Probate

If the property is held by joint tenants with survivorship, the interest of a deceased owner automatically gets transferred to the remaining surviving owners on presentation of a death certificate, so many of the problems here will not arise. The surviving joint tenant can normally sell the property immediately. When homes are in the name of a single person or are owned as tenants in common (meaning each person owns a specified share), a sale cannot be completed until probate has been granted, regardless of whether or not there is valid Will.

Some far-sighted owners have put their property into a lifetime trust and here the Trustees are in a position to deal with the property immediately – though there is no guarantee there will not be Inheritance Tax to pay as it will generally be included as an estate asset for tax purposes, so advice here is usually of a bespoke nature.

If the deceased owned property in their sole name, a grant of probate will be needed before the executors can sign the contract to sell or transfer the property. An executor cannot actually sell the property until probate has been granted, as before this they don’t have the authority to sign the sales contract. That doesn’t mean you can’t put the property on the market, but potential buyers may be put off if probate takes longer than one would hope. Or worse, it may turn out that the executor does not have the right to sell at all, perhaps through clauses in the Will.

If the property is already in Trust, the sale may be nothing to do with the executors of the Will. The Trustees will be in control of the property and deciding what to do with it. In most cases, the executor will still need to check the situation with a view to including the relevant proportion of the value of the Trust in the estate and completing the IHT forms which are needed where a trust exists. If this is the case, we would recommend that you may be better appointing a solicitor than trying to deal with the estate yourself.

Unless the Will says something to the contrary, or there are complications because a third party lives in the property, beneficiaries have no special rights. They do have the right to sue the executor if the house is sold for less than a reasonable market value, and to make life difficult for the executor, so an agreement is best. But if one beneficiary benefits more than they should – perhaps by paying less than full market value, executors can be in trouble again. Proceed with caution, and if you think arguments are likely, it may be time to hand the work over to a specialist solicitor to handle the complaints rather than damage relations by making yourself the bad one!

In addition to the above there are many potential pitfalls that could come to light when dealing with an estate but luckily many can be avoided by appointing a solicitor to work with you from the outset.

One issue which can prove disappointing is where the deceased either no longer owned the house, perhaps having sold it in full or part to get more income or capital. Or they could have taken out Equity Release for the same reason and only own part of the property. Some people’s expectations will sadly be disappointed. Or they owned it jointly with another person who may automatically inherit full ownership irrespective of any Will.

If the property is registered with the Land Registry, this should be a relatively straight forward matter of downloading a copy of the official copy title entries and the title plan. Check that the property is in the deceased’s name, watch out for joint owners and mortgages and that the plan shows the full extent of the property. You may discover that there is more than one title, that there is an equity release mortgage or even that the home is no longer owned.

If it is not registered, perhaps the deceased had owned it for many years, you or your solicitor will need to find the original copies of the paper title deeds. They may be held in safe custody by the solicitor or bank, or with the deceased’s papers at home. Once found, it is a good idea to get the property registered at the Land Registry – this is known as a ‘Voluntary First Registration’. We can certainly point you to someone who can help with that, and or the application for a grant of probate.

Ask a solicitor to check the title entries and plan, or the paper title deeds, for restrictions affecting the property, or defects in the title. These may need to be dealt with before the property can be sold. We sometimes find that if the current owner was pre-deceased by their spouse, who was the original sole owner, and who left the property to them in their will, the title documents may not have been updated. This can cause lengthy delays for all parties involved in the sale, and the process would need to be completed at the Land Registry before a buyer can proceed to an exchange of contracts. It is good to get this in hand as soon as is practicably possible.

If the house is not sold until sometime after the grant of probate has been issued, the value of the property may have increased above the value noted at the date of death, and this could lead to the executors incurring a CGT liability. For the year of the death and the following two years, the executors have a CGT allowance to offset this – but there could still be tax to pay. we understand that there are potentially ways to reduce that.

If the estate is subject to Inheritance Tax (IHT) and the property is sold before HMRC has issued tax clearance, (which would be unusual), HMRC will wish to take the sale price as the date of death value, so additional IHT may be payable on any increase in value. If the property has sold for less than the date of death value, the executors can usually apply to reclaim the overpaid IHT.

No one wants to inherit a house which has burned down or with squatters or vandalised – and often insurers won’t pay out if the terms of the insurance have not been met by “negligent” executors! If there are such problems, the executors may be liable to the beneficiaries so, it is vital to check the insurance urgently. If you can, find the documents and arrange for the insurers’ requirements to be followed. They will usually include draining down all water, removing valuables and inspecting the property at least every two weeks, with a formal record kept. If you are unable to find the insurance documents, we are happy to put you in touch with appropriate brokers, or insurers.

You will also need to inform the local authority and utility suppliers and take meter readings, together with obtaining any balances or credits as at the date of death.

Inheritance tax is payable on a person’s estate following their death if it exceeds the inheritance tax threshold. The inheritance tax threshold as of July 2019 for an individual is £325,000. The threshold can potentially increase to as much as £1 million for a married couple or civil partnership, when incorporated with the main residence allowance. Any part of an estate valued above the threshold is taxable, with the standard inheritance tax rate standing at 40 per cent. The estate may pay inheritance tax at a reduced rate of 36 per cent on some assets, however that’s only if the deceased leaves 10 per cent or more of the “net value” to charity in their will.

Often solicitors as executors, or for and on behalf of executors, recommend that three separate valuations from local estate agents are obtained. Whilst this may on occasion be of value, it can also lead possible delay and potential conflicting advice. It certainly should not be a selection process that leads to appointing the agent to handle the sale that quotes the highest “valuation” and the lowest fee. Years of experience tell us that executors are best advised to ensure that every attempt is made to ensure the best outcome is achieved for the beneficiaries. If the estate is likely to be taxable, a RICS probate valuation is required. We can arrange for this to be done at the same time as carrying out a full marketing appraisal, to include advice and recommendations on how to achieve the best price through a full transparent marketing strategy.

In order to fulfil your responsibilities as an executor, it is important to ensure that the property is presented to best effect and fully exposed to the market, to as many potential buyers as possible, in a timely manner. To this end, we always recommend that any cleaning or simple works like garden clearance or tidy are undertaken prior to any professional photography or marketing commences. An Energy Performance Certificate will almost certainly be required and ideally a floor plan should be prepared to be included in the property brochure.

The property should be advertised on all of the major internet property portals to include Rightmove, Zoopla, PrimeLocation and On The Market, along with good exposure in the local press. The instructed agent should have a proven track record of selling such property and it is best too if they offer a full range of alternative methods of sale (e.g. Private Treaty, Informal or Formal Tender, Auction). Financially qualifying all potential buyers is also essential. Dreamers can cost a fortune in legal fees and delays, only to find that they never stood a chance of getting a mortgage in the first place. If required, agents can also arrange for 7 day notices in the press, and facilitate sealed bid offers where appropriate.

A good agent will suggest any modest improvements which would increase the property. It is often worth spending a few hundred pounds on minor repairs and improvements. Too often people take one look at an untidy front garden or paint peeling off the front door and walk away without even going in. But it is surprising how many people want to buy a property they can do-up. These modest expenses can usually be offset against the tax position on the deceased’s estate

Inspecting empty properties throughout the process and providing regular update reports is a requirement to maintain valid insurance. It is also wise to ensure the property is well-maintained and presented throughout the marketing and sale process. Your agent should keep you informed about the condition of the property – as well, of course, about marketing and viewing feedback and current market conditions as well as any other information you need to know.

Once a buyer is found, it is important that a contract-ready pack is ready to send the buyer’s solicitor. This is where it is important to get a solicitor on board to act for you as the executors as early as possible in the process. Many of the enquiries a buyer might raise late in the sale process can be addressed prior to marketing thereby not only accelerating the sale but also reducing the chances of a sale either falling-through or a buyer attempting to renegotiate at the “last minute”.

It’s a sad fact that over 33% (with some agents far more) of sales “fall-through” prior to exchange of contracts. In many instances such outcomes can be completely avoided or, in the least, the chances considerably reduced by not only having a sale ready pack but by having an experienced estate agency team to progress the .sale. Driving your sale forward until completion, our dedicated sales progression team will manage the whole process, liaising with the purchaser, their solicitor, finance broker, surveyor and any contractors or consultants to ensure that everything runs as smoothly and quickly as possible. In the event of there being any related sale, we will check with all parties in the chain from the outset and continue to do so throughout the sale process.

We offer a complete end-to-end service to sell probate properties quickly and for the best possible price.

Our service is bespoke and is a unique end to end service from property valuation through to sale completion. We pride ourselves on achieving the very best outcomes for our clients.

HMRC could (and have done in the past) seek to increase the Inheritance Tax owed should the house be sold for more than the probate value, usually when the sale is made, soon after the Grant of Probate has been awarded.

This has been a bone of contention for many who have gone through the probate process and the guidance isn’t exactly clear cut. Although increases of this nature are challengeable by way of negotiations with the District Valuer, it can be both time-consuming and distressing at a point when you least need aggravation.

Capital Gains Tax can also become an issue if the administration process is prolonged and the final sale price is higher than the probate value. In short, if the property is sold for more than the initial valuation, you could potentially be liable for Capital Gains Tax as well.

On the flipside, a house sold for less than probate value can result in a refund from HMRC for any Inheritance Tax overpayment the estate may have made. This, however, can only be claimed if the property in question is sold within four years of the deceased’s passing.

Recent shifts in the property market have increased the number of Inheritance Tax refund claims made to HMRC, but it’s usually well worth consulting a solicitor before trying to attempt the claim yourself.