If you’ve taken on the responsibility for administering an estate, you’re likely to find that selling property or belongings on behalf of that estate will be a significant part of the role.
The responsibility for any sales will fall to the personal representatives of the estate. If there was a Will, this will be the executors. If no valid Will was left, it will whoever has been appointed as the administrator of the estate.
This doesn’t necessarily mean that personal representatives have to handle the whole sales process on their own. It’s perfectly acceptable (and often expected) for them to call in support, both from professionals such as solicitors, estate agents and auctioneers, as well as from other family members or friends.
However, overall responsibility for deciding what is sold and making sure any offers are consistent with market value will remain with the personal representative.
Do property and belongings have to be sold?
Generally speaking, personal representatives have to act in a way that is in line with whatever is recorded in the Will of the person who has died. (In situations where there isn’t a valid Will, administrators will need to act in accordance with the intestacy laws). If specific instructions have been left for certain property or belongings being given to certain beneficiaries, it will be the personal representative’s responsibility to make sure that these are distributed accordingly. In these cases, it may be that the Will requires property and belongings to be passed directly to beneficiaries rather than for them to be sold and the proceeds distributed.
Even if no clear instructions have been left, personal representatives and beneficiaries can still decide to transfer the ownership of belongings or property to beneficiaries rather than selling it. In the case of property, this would involve transferring the property into the names of the beneficiaries with the Land Registry.
The benefit of this would be that beneficiaries could choose either to live in the property themselves or to rent it out. They could also choose to have the property transferred into their name rather than sold if they didn’t want to begin the job of clearing the property and preparing it for sale until after the probate process has been finalised.
However, if there is inheritance tax to pay on an estate it might not be possible for property or high-value belongings such as vehicles, art or collectibles to be passed directly down to beneficiaries. Rather, those high-value items may need to be sold in order for the proceeds of the sale to be used to settle the tax bill.
What is the process of selling property?
One of the first tasks will be to have the property valued. A valuation will be required as part of the process of applying for a Grant of Probate (or Letters of Administration if there is no Will) and calculating any inheritance tax that may be due.
One of the most straight-forward ways to do this is to seek a valuation from a local estate agent. It’s usually wise to consult two or three estate agents to ensure you’re getting a good idea of the property’s market value. If you think there is likely to be inheritance tax to pay on the estate, you may need to seek a more specialist valuation. Whichever type of valuation is more appropriate, this stage is very important, as the personal representative has a responsibility to the estate to ensure any offer they later accept for the property is in line with market value.
The personal representative can choose to put the property on the market whenever they choose. However, there are some timing issues to consider here, as two things will need to be completed before the sale can exchange and complete.
- Receiving a Grant of Probate. (Needed to certify that you have the authority to sell property on behalf of the estate).
- Clearing the property of all personal belongings.
Both these things often take longer than expected, so you may wish to make some progress with them before a property goes on the market, especially if you expect there to be quite a lot of interest from potential buyers. Equally, if you think the property may take longer to sell, you may choose to get it on the market as soon as possible. The only issue with this tactic is that if you were to find a buyer relatively quickly, they might get frustrated if there’s a long wait before a Grant of Probate is obtained and the sale can proceed.
If the estate is relying on money from the sale of the property in order to pay an inheritance tax bill, the timing of all of this may become even more complicated. This is because the balance of the inheritance tax bill will become due at the end of the sixth month following the death.
What is the process of selling other belongings?
The process of selling belongings including vehicles, art, collectibles and jewellery on behalf of an estate is generally more straightforward than selling property. A Grant of Probate isn’t usually needed for selling these kinds of assets, but you will need to make sure you have carefully documented all steps taken as part of the sale.
It’s very important to make sure you have properly valued all belongings. For most items, you’ll be able to use available data to value them yourself. For example, you’ll usually be able to compare used car prices to value any vehicles belonging to the estate. However, if the estate holds any more specialist or particularly high-value art, vehicles, jewellery or collectibles, it’s advisable to seek a professional valuation. An art dealer, antiques dealer or auction house is likely to be a good first port of call.
Is there anything else you need to keep in mind?
There are a few other key things that personal representatives need to keep in mind during the process of selling property and belongings.
Firstly, capital gains tax may well be a consideration if any assets belonging to an estate have gone up in value between the valuation and the sale. If this is the case, personal representatives will need to complete any necessary tax returns before the process of administering the estate is finalised.
It’s also important for personal representatives to be aware that they can be held accountable for any assets that are sold beneath market value. This is why it’s so important to seek accurate valuations and document everything you do. If you’re concerned about this, a specialist probate solicitor will be able to advise you on how to protect yourself.
How Roche Legal can help
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- Trusts and Estate Planning
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