Probing for Probate!

[salawinder]

Hi all,

I'm after some advice as to whether we need to go through probate or not...

My father-in-law passed in June 2022, in his will he named his two daughters as executors. He specified that all property he owned should be split equally between each daughter. There was no money to speak of, so the only things of concern are the properties.

There are three properties, all of which he was a tennant in common with his wife:
The house, which is on the land registry
A commercial property, not on the land registry, but we have all of the deeds.
A plot of land which is currently progressing through a first registration without documents.

Changing the names on the Land Registry is I believe fairly easy, but the commercial property is another matter (let alone the land!), andwe want to avoid any costs if possible.

We understand that if all parties agree we can 'ignore' the instructions in the will, so what we actually do comes down to what is best for all, and all parties involved are happy to go with the best (cheapest) solution.

The house is occupied by my mother-in-law and one of the daughters, and the commercial property (and the land) has a business owned by the same daughter.

Looking to the future we want to protect the properties should my mother-in-law have to move into care, and as she jointly owned all properties we don't want to have to sell any to pay for care.

What would be the best end result to protect the properties, and what should be done to achieve this?

Thanks.

[monabri]

(I'm not a solicitor! )

As you have 3 assets seemingly of significant value how can you NOT go through probate? Sooner or later you may wish to dispose of the assets or take an income from them?

Then you will need to address the case as to whether their is any Inheritance Tax to pay?


"Looking to the future we want to protect the properties should my mother-in-law have to move into care, and as she jointly owned all properties we don't want to have to sell any to pay for care."

Wouldn't her share of the assets would be 'ring fenced' to cover any care bills (assuming she has assets worth over c.£23k). There might be mileage as on of the daughters lives with mum and it is her home - perhaps you could mitigate/protect the house...?

Just a view.

[Lootman]

(I'm not a solicitor! )

As you have 3 assets seemingly of significant value how can you NOT go through probate? Sooner or later you may wish to dispose of the assets or take an income from them?.

I am not a solicitor either but I am fairly sure that nobody can be forced to go through probate. Rather the situation is usually that the estate beneficiaries are motivated to go through probate because institutions and third parties often will not release assets until they see a Grand of Probate.

That is true for financial assets and accounts anyway. But in this case all the assets are physical assets. And if the beneficiaries already have full access to, and possession of and usage of those assets, then they may not initially see the utility of going through probate. For example the title of a property can be changed when it is subsequently sold, as often happens when that property is held as joint tenants with a surviving occupant.

The real losers if probate does not happen are any creditors of the estate. This is not surprising because probate primarily exists to protect creditors, and not the beneficiaries or next of kin of the deceased.

[monabri]

https://www.co-oplegalservices.co.uk/pr ... e%20future.


"Essentially the assets will remain in limbo and the beneficiaries won’t be able to receive their inheritance"

If ypou wanted to sell the asset at a later date, this could be tricky.

[Grumpsimus]

(I'm not a solicitor! )

As you have 3 assets seemingly of significant value how can you NOT go through probate? Sooner or later you may wish to dispose of the assets or take an income from them?.

I am not a solicitor either but I am fairly sure that nobody can be forced to go through probate. Rather the situation is usually that the estate beneficiaries are motivated to go through probate because institutions and third parties often will not release assets until they see a Grand of Probate.

That is true for financial assets and accounts anyway. But in this case all the assets are physical assets. And if the beneficiaries already have full access to, and possession of and usage of those assets, then they may not initially see the utility of going through probate. For example the title of a property can be changed when it is subsequently sold, as often happens when that property is held as joint tenants with a surviving occupant.

The real losers if probate does not happen are any creditors of the estate. This is not surprising because probate primarily exists to protect creditors, and not the beneficiaries or next of kin of the deceased.

It true that it is not a strict legal requirement that you have to get probate, but it really the only practical option for all but the smallest estate with no real property involved. It is not clear from the OP post what sort of values are involved, but the estate maybe liable for inheritance tax and it is certainly illegal to try and evade this.

What probate gives the executors is the legal authority to deal with the deceased estate. This is important because the properties are all held as tenants in common (not as joint tenants) with his wife and in these circumstances probate is always required to sort out the title. Otherwise the wife will end up owning a part share (50% ?) in three properties, with nobody having any legal authority to deal with the other shares.

I am not a Solicitor, but I was a Surveyor. I have come across properties where this type of thing has happened and it was expensive and time consuming to sort out. I would suggest that you need to consult a Solicitor for proper for advice on this situation. It may cost money now, but owning property does cost money. Incidentally, you don't need to let the solicitor deal with the Probate, you could still deal with this yourself.

Sometimes proper legal advice is required, as I believe it is in this case. Us Lemon Fool non lawyers mean well and try to be helpful but are not a substitute for a real lawyer.

[Lootman]

https://www.co-oplegalservices.co.uk/probate-solicitors/how-do-i-know-if-probate-is-required/#:~:text=Essentially%20the%20assets%20will%20remain,and%20friends%20in%20the%20future.

"Essentially the assets will remain in limbo and the beneficiaries won’t be able to receive their inheritance"

If ypou wanted to sell the asset at a later date, this could be tricky.

I agree that the crucial issue is whether the assets are "in limbo" or not.

Financial assets typically are. It is less clear in the case of physical assets since they are often already in the hands of the beneficiaries.

I once sold a house 17 years after the titled owner had died. It was not a problem. The selling solicitor handled it.

[salawinder]

Thanks to all for your advice!

I believe the properties were held as tennants in common for exactly that reason - The property could not be sold (to pay for care or otherwise) as the other tennant was still in occupation.

The total value of the (half share) of the three properties is under the inheritance tax threshold (we're oop north!), in fact the total value is almost certainly still under the threshold!!!

I think a visit to my favourite orifessinal will be in order (from my other dealings regarding the land Solicitors are not my favourite people, but I appreciate they can't all be that bad ...surely!).

Again, thanks for the advice.

[Clitheroekid]

We understand that if all parties agree we can 'ignore' the instructions in the will, so what we actually do comes down to what is best for all, and all parties involved are happy to go with the best (cheapest) solution.

I don't have time at present to address the other questions, but you need to be aware that what you're doing is potentially going to incur capital gains tax liabilities.

If someone is entitled to inherit a property but then gives it away they are treated as having sold it at market value, and would potentially have to pay CGT on any difference between the date of death value and the market value at the date of the gift. The longer you leave it the greater the potential uplift in value and the greater the CGT bill. Furthermore, the annual exemptions from CGT have now been drastically reduced.

There are also potential IHT implications, as the gift would be a potentially exempt transfer.

You may be able to avoid any such liabilities by executing a Deed of Variation, but this must be completed within two years of the death, i.e. by June this year, which is now only a few weeks away.

Avoiding the cost of professional advice can be a false economy!

[9873210]

The real losers if probate does not happen are any creditors of the estate. This is not surprising because probate primarily exists to protect creditors, and not the beneficiaries or next of kin of the deceased.

IANAL, IIRC and possibly from a different legal system:

One small benefit to beneficiaries is that if you jump through the hoops probate can extinguish future claims on the estate. This can give peace of mind if the decedents affairs were chaotic, or unfathomable to their heir or representative.

[Lootman]

The real losers if probate does not happen are any creditors of the estate. This is not surprising because probate primarily exists to protect creditors, and not the beneficiaries or next of kin of the deceased.

IANAL, IIRC and possibly from a different legal system:

One small benefit to beneficiaries is that if you jump through the hoops probate can extinguish future claims on the estate. This can give peace of mind if the decedents affairs were chaotic, or unfathomable to their heir or representative.

I think so although if the estate is "chaotic or unfathomable" then I would renounce from acting as an executor anyway.

Likewise if there were a lot of debts and creditors, I would renounce. Too risky and potentially expensive. If the debts of an estate exceed the assets, then stay well away and let the creditors apply to conduct probate if they are that bothered.

[9873210]

IANAL, IIRC and possibly from a different legal system:

One small benefit to beneficiaries is that if you jump through the hoops probate can extinguish future claims on the estate. This can give peace of mind if the decedents affairs were chaotic, or unfathomable to their heir or representative.

I think so although if the estate is "chaotic or unfathomable" then I would renounce from acting as an executor anyway.

Likewise if there were a lot of debts and creditors, I would renounce. Too risky and potentially expensive. If the debts of an estate exceed the assets, then stay well away and let the creditors apply to conduct probate if they are that bothered.

Renouncing is a possibility, but an estate can be both almost certainly very solvent and quite chaotic. The big stuff was mostly locked down (e.g. with third party notifications) a decade or so prior, but there were a couple of years of variable dementia and indifferent bill paying on small stuff. Dot the eyes, wait out the notice period, pay the creditors that show up, distribute the rest to the heirs and write a polite go-pound-sand letter for anyone who's too late.