The loss of a loved one is always devastating and can lead to many challenges including mastering the UK tax and inheritance system, all whilst grieving.
However confronting the process can seem, it is worth remembering that inheriting property is actually very common and there is plenty of advice available regarding the process.
Although saying that, often the complexities are when a property is inherited between two or more siblings, resulting in decisions to be made regarding how the property is to be shared.
This article will discuss the process as well as other considerations to be thought through when buying a share of inherited property from a sibling.
What are the First Steps When Someone Passes Away?
Following the death of a family member, the first step would be to establish if a will was put in place.
If there is a will, the nominated executor of the estate will be required to apply for probate, the judicial process where the will is given consent by a court of law.
Following the grant of probate, the executor of the estate will be able to oversee the process of the evaluation of the assets that make up the estate of the loved one who
has passed away.
This process includes; settling any bills and distributing any assets that remain in accordance with the details within the will.
The typical timeframe of the process to be granted probate often can take anywhere between 4 and 8 weeks.
It is strongly advised that shortly after a bereavement, that professional advice is sought so that the family are supported throughout the process, advised appropriately and ensuring the necessary legal requirements and deadlines are met.
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Property Inherited by Siblings
Once the property has been legally inherited by siblings, there could still be decisions to be made should the property wish to be retained in the family, rather than be sold and the finances split.
Decisions would involve how the property is to be shared, for example, the type of joint ownership to be pursued with, either as joint tenants and tenants in common or should one sibling choose to move in, then the process of buying out other siblings would need to be undertaken.
In any complex scenario with siblings involved, it is highly recommended to seek legal advice so that an informed decision can be made.
One Sibling Buying out Another
Should all parties agree that the inherited property should remain within the family’s ownership but one sibling is to buy out another, then a document is required to be submitted to the land registry with both signatures of the siblings, along with the grant of probate.
The sibling seeking to buy out the other(s), will require the funds available to do so, either by cash or a mortgage offer in place.
It is also worth noting that all the usual expenses to purchase property will still be required such as legal fees, mortgage fees and stamp duty, if applicable.
As you can see, there are many factors at play with regard to inherited property and the legal and tax consequences on both sides of the transaction, and therefore it is always highly recommended that independent legal and tax advice is sought as required, ahead of any decisions or transactions.
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What Happens if Siblings Cannot Agree and a Forced Sale is Needed?
Should there be a disagreement with regards to which approach to take in relation to sharing an inherited property and communications break down, an application to force the sale of a property can be made to the courts, in certain situations.
The court application would be for an Order for Sale under The Trusts of Land and Appointment of Trustees Act 1996, as both or all siblings will hold the property under a trust of land.
Courts will review an application to force the sale of the property against the following points:
- The intentions of all parties or siblings when the property was put into trust, for example when the property was inherited
- The purpose of the trust
- The welfare of any trustees who are minors, or those minors who may occupy the property
- The interest of any secured creditors
Should the sale be needed in relation to probate, the sibling who is selling the property can also request an emergency grant of probate allowing the property to be put up for sale after 10-14 days.
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Other Considerations or Scenarios
Another situation could be that siblings inherit a property that has an outstanding mortgage in place.
Again, this can be another complex situation, that could require specialist advice and further research to be undertaken to establish if the person who has passed away had any type of life insurance policy in place that could be used to claim against and therefore pay off the mortgage.
As discussed there are many complexities when it comes to individual circumstances, family politics, the legal process and the taxes payable, and therefore seeking professional advice as soon as possible following the death of a loved one is highly recommended.
Please feel free to get in touch with our friendly team of advisors to book an initial consultation to discuss the options available to you.
Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.