Dear All
can a beneficiary or executor purchase the property of deceased as long as it represents fair market value.
Is there a process for this.
Regards Awais,
An executor must not profit from his role. There would be a conflict if he was to act both as vendor in his capacity as executor and also as purchaser. This is so even if the purchase price represented a fair market value. However if all the beneficiaries who are entitled to share in the residuary estate were to give their agreement to the executor purchasing the property from the estate, then there is no reason why the transaction should not proceed.
Patrick Moroney
Agree with Patrick.
Self dealing only allowed by consent of beneficiary. More care needs to be taken on information supplied on the purchase.
See.
https://www.bailii.org/ew/cases/EWHC/Ch/2020/767.html
Richard
PFEP
Somewhere in the back of my mind is a recollection that where a personal representative sells to themselves this does not result on them obtaining a good title. Not sure, off hand, though why this should be if an assent by a PR to themselves as beneficiary would provide a good title. Does this ring a bell with any other contributors?
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
2 Likes
Not sure, Paul, to what you may be referring.
My understanding is that, at least in theory, good legal title is capable of being acquired by the trustees acquiring trust property. Such acquisition is possible, without court permission, if the beneficiaries are all sui juris and are absolutely entitled to the beneficial interest in the property purchased and who do not disagree with the purchase.
However, the problem in practice is that any future potential purchaser of the property knowing that the trustees purchased from a trust of which they were trustees may be put off from purchasing, particularly in light of the fact that the right to avoid the initial purchase is enforceable against a successor.
The so-called “self dealing” rule applies to PRs (as well as trustees);
Kane v Radley-Kane [1999].
Malcolm Finney
STEP 2nd edition Paragraph refers to conflicts of interest. Does it assist?
Re Paul’s comment I believe that the transaction is voidable
I have a case where under the terms of her Will wife left her husband a life interest in her 50% beneficial share in the matrimonial home which was held by husband and wife as tenants in common in equal shares. Wife’s Will provides that on husband’s death wife’s 50% beneficial share in the house passes absolutely in equal shares to husband’s and wife’s three children. One of the three children is an executor and Trustee in wife’s Will and wants to buy the house (husband’s 50% share and wife’s 50% share). Husband and the other two children consent to the sale, the house has been valued and husband has capacity as well as the three adult children. Having read this thread it appears that a sale of the Trust property to the Trustee can proceed without Court approval as all parties consent to the sale. Is this correct?
Thanks,