Any advice on this would be gratefully received.
I have been approached by two brothers and have an outline of the situation as follows, but not the full details yet:
The parents appointed each other their children as executors. They included life interest trusts in their Wills for two properties, for the benefit of the surviving spouse. Mum died in 2016 and the only assets in her name were the two half shares of the properties, which together equal well over £325k. Nothing was done with either property until in 2018 when one seems to have been transferred into the joint names of the surviving spouse and the trustees, without probate having been granted. Dad has now died.
Am I wrong in think mum’s estate would need a Grant and inheritance tax paid on both properties? A solicitor acted for them in transferring one house in 2018, but I’m not sure on what basis they were instructed.
VP Legal Solicitors
General they would need a Grant for the mother’s estate and to transfer the 1/2 share she held in both properties. However, if during her lifetime she transferred her shares in the properties to a trustee, then that might explain the transfer without a Grant. I would suggest enquiring of how same was done.
Why would a grant be needed on mum’s death? Dad, as surviving legal owner, is competent with a second appointed trustee, to transfer the legal title.
This he appears to have done, into the names of the trustees, who now hold as trustees on the terms of mum’s will. Even if he had, engineered the title into his sole by presenting the death certificate to the Land Registry, he would still hold his wife’s half as trustees on the terms of her will.
There would be no inheritance tax on the properties assuming the terms of the will means that the survivor’s interest qualifies as an IPDI ( and they are actually married) as spouse exemption applies.
Wills & Tax Partner
I think the reason for the discrepancy is because the legal title can be transferred at the land registry without a grant of probate e.g. by filing a form DJP (deceased joint proprietor) and then appointing additional trustees of the trusts that subsist behind the title. However, it is the beneficial title that you are really interested in , and it appears that nothing, in fact, has been done with that. To deal with the equitable half interest the executors of Mum’s estate would need to assent in writing to the vesting of the half share in the trustees of the life interest trust. You may need to do now what should have been done back then.
Clarke Willmott LLP
It is my firm’s policy to obtain a grant on first death if the property is held as tenants in common (as you say it was a “life interest” Will). This ensures that the equitable interest is transferred appropriately. You will be able to claim TNRB, & RNRB and TRNRB if the beneficiaries are lineal descendants. You may find that there is no IHT to pay after all the allowances.
Hamilton Davies LLP
Many thanks for all your help. I was worried about the IHT implications but they were married, so my understanding is I can use spousal exemption as per Lee’s response.
VP Legal Solicitors
Sec 37 Stamp Act 1815 provides for a penalty of £100 to be paid by any person who takes possession of and administers any part of the estate and effects of any person deceased without obtaining probate
of the will or letters of administration of the estate of the deceased.
Is not the issue the need to ensure that when the property is sold, the trustees of the title can be satisfied that they distribute the proceeds of the late wife’s share to those legally entitled to them?
In the absence of a grant, there is no evidence of that legal entitlement.
The husband and other trustees may know who is entitled but any such understanding may be lost should any die and/or lose capacity, or should there be any need to evidence this to a third party.
I have seen similar situations where, following the sale of property, the solicitors acting for the seller have refused to pay out the (late wife’s) share until a grant is produced.
A failure to obtain the grant could, therefore merely be storing up problems, which might surface only once the principal players are no longer able to assist.