Handling an uncle's probate

Donal55

Registered User
Messages
21
Perhaps someone who knows the ins and outs of probate could advise me in a general way, though I will obviously get proper legal advice from the solicitor handling this probate, once that process nears completion. But for now I am just keen to understand the general principles involved.

I am acting as executor for a bachelor uncle who died down the country and has left his house to two of my nieces (his great nieces). They are sisters, the youngest (Sister A) living in America and the eldest (Sister B) living here. Initially I planned to sell the house on the open market and divide the proceeds between the sisters – after the tax man takes his 33% cut - their inheritance tax threshold is very low. However, Sister B is keen to try and buy the house, which is near a train station with a good service to Dublin, and her younger sister (A), while obviously keen to inherit a decent lump sum, is also keen to help her sister achieve the near impossible dream for her generation by getting a mortgage to buy a house in Ireland.

I would like to see this happen but am also aware of my legal responsibilities as an executor. So I have two questions.

1: When I had the property valued to start the process of probate, a local auctioneer gave me a relatively low value, as it is in poor condition. But more recently when I had two other estate agents look at it, both came back with far higher values, one radically higher than the other. Nobody can predict its true value market value until people start to bid on it, but I now have three totally contrasting values. The two sisters have agreed a price between them, that Sister B can afford to pay, and Sister A would be happy to sell her share for. This is higher than the initial valuation but lower than the more recent ones (which may be more accurate or may be estate agents trying to tout for business). If the sisters were inheriting it from a parent, the taxman would not be involved, as its value would be below that threshold. However, as the tax man will be looking for his 33% share when the sale is concluded, can the sisters simply agree between themselves on what they feel is an amenable and fair price, and pay the inheritance tax on this sum? Or can Revenue insist on any final sale price must be established by another independent valuation (which, because the three valuations so far have varied so much, might put it out of Sister B’s reach)?

2: If I let them agree a price between themselves that they are both happy with, am I correctly fulfilling my duties as an executor? The house was simply left to them: the will never states that I need to sell it and divide the proceeds. Also, if they decide that Sister B will buy out Sister A, should I simply pass the house over to them as soon as probate occurs and let them both get their own legal advice on the sale between them?

Once probate occurs, am I then essentially out of the picture, as I will have paid the solicitor handling my uncle’s probate and ensured that the initial inheritance due tax is fully paid? After that, is any Capital Gains tax that might arises, if the sale price agreed between them is higher than the initial probate value, a separate matter for them?

Maybe the answer to all these questions are simple, but I have a hunch that nothing involving wills and tax is ever simple.
 
Maybe the answer to all these questions are simple, but I have a hunch that nothing involving wills and tax is ever simple.
You've answered your own question.

These are serious questions that warrant proper professional advice. I'm not sure what is to be gained by trying to second-guess that advice here?
 
You are making this more complicated than it needs to be.

Put the house on the market, see what offers you get; beneficiary who wants to buy, puts in an offer €1 above the highest bid & buys it.
 
Firstly, what valuation has been submitted as part of the list of assets?. Ideally you would want it to be one of the higher ones as long as it is realistic and in line with other properties in the area, that minimises CGT impact if sold.

Secondly, if the house has been let to the 2 sisters, could it not simply be transferred to them as part of probate and then if one wants to buy the other out, let them do so. ? You would all need seperate legal advice on that and I have no idea what the tax implications are but might be worth considering.

Note once probate has been done, a Tax Clearance cert from Revenue is normally required as well before the estate is distributed
 
I think it is up to the beneficiaries to pay their own CGT, you only need to pay CGT if the assets increased in value from date of death and the date you distribute the assets. And then only on the difference.

Let the beneficiaries decide themselves what they want to do and assist them in making it as tax effective as possible with the help of the solicitor.

You seem to be making it very complicated worrying about the tax the beneficiaries may have to pay.
 
worrying about the tax the beneficiaries
Anyone resident in Ireland will be responsible for their own tax.

For overseas residents however, it is advisable to retain an amount equal to the tax due pending clearance from Revenue that it has been paid.
 
Thank you to everyone for your comments. Apologies that I seem to have made my question over-complicated. To put it more simply. Niece B would love to buy this house but has a limited budget as a teacher, so she would likely be outbid in an all-out bidding war. Her sister would also love to see her being able to buy the house. I am not concerned about them having to pay 33% tax on their inheritance. My question is about whether they can agree between themselves, a fair price for the house – a price they are both happy with and can run by their separate solicitors – without them having to put it on the open market to see what it might fetch if there was a bidding war. Or will Revenue insist that the price paid is equal to the highest of the three different valuations I have received, so as to maximise the tax due. I hope this question is clearer.
 
Any sale below the market price, would be considered as a gift from the vendor to the purchaser and could be liable to CAT if the purchaser has already used their tax free threshold
 
I think it is up to the beneficiaries to pay their own CGT, you only need to pay CGT if the assets increased in value from date of death and the date you distribute the assets. And then only on the difference.

Let the beneficiaries decide themselves what they want to do and assist them in making it as tax effective as possible with the help of the solicitor.

You seem to be making it very complicated worrying about the tax the beneficiaries may have to pay.
To clarify, the beneficiaries are liable to CAT not CGT
 
Any sale below the market price, would be considered as a gift from the vendor to the purchaser and could be liable to CAT if the purchaser has already used their tax free threshold
Thank you for that, JPD. But when I have three respected auctioneers all confidently giving me three different prices (with €90,000 in difference between the lowest and highest) how do I establish what is the market value, short of putting it on the market? Would Revenue accept an average valuation, based on the three I have been given in writing? Or would I need to pay the company providing the potential mortgage to Niece B to send out a fourth valuator whose opinion might carry more weight, because he/she would not be a local estate agent keep to get the sale of the property.
 
Why did you seek three different valuations?

It sounds to me almost akin to getting diagnoses of a patient's state of health from three separate doctors - a recipe for confusion.
 
You could employ a professional valuer. Your solicitor might recommend. The value of the house should be that on day of death. A valuer would take into account other similar properties sold around that time. If it sells for higher at a later date and on open market, the difference is taxed as CGT (not sure but think it is different rate to CAT?)

After probate is granted, and all work flowing from that is done, the solicitor should present you with the estate accounts that you agree and sign off on.
 
she would likely be outbid in an all-out bidding war. Her sister would also love to see her being able to buy the house
So sign the house into both their names & leave them sort it out!

One possible solution would be for sibling A to live in the house & pay 50% rent to sibling B for say 5 years & then buy out Sibling B when salary has increased.

Sibling A can also avail of rent a room & 14k x 5 years would be 70k & a nice chunk of the buy out.
 
Last edited:
Back
Top