Costs in connection with devise


#1

The will leaves a specific gift of a house to four beneficiaries.

The family are considering a few options and I am still unclear as to the costs implications (I have seen conflicting advice).

Option 1 - transfer house to beneficiaries. They can sell later down the line if they wish. I think the costs of the assent are an administration expense…?

Option 2 - sell the house (as PRs) and distribute the proceeds to the beneficiaries. Who bears the costs of this sale? Would any CGT come from the estate or the asset?

I think I know the answer but I can’t find it in black and white!

Any help very welcome!

Many thanks

Roger Cork
ALS


(Paul Saunders) #2

Option 1: My understanding is that the costs of the assent are an estate expense, but the costs of registering are the liability of the devisee, as it is their lawyer who must complete the SDLT forms required at that time (not the executors’).

Option 2: the answer may depend upon whether the executor appropriates the property to the beneficiaries before sale, as the doctrine of relation back only applies if there is an appropriation. Having said that, the costs of the sale are a valid deduction from the proceeds and would be payable by the devisee(s), regardless of whether the sale is made before or after appropriation.

The need to appropriate a specific gift is often overlooked and, for tax purposes, a disposal by the executor on the instructions of the beneficiaries is often treated by the executors as a bare trust situation, even though an appropriation might, at best, only be implied by the executors’ actions.

Paul Saunders


(Malcolm Finney) #3

Is it not the case that with respect to specific gifts any costs of assenting the property, including costs of transfer, are those of the specific beneficiary and do not fall on the residuary estate (assuming no contrary direction in the will).

However, any costs incurred by the PRs with respect to non-specific gifts are an administration expense.

Malcolm Finney