What do you do when you and your siblings are all left equal shares in a property but another sibling currently occupies the home that needs to be split?
We were recently asked for advice on the following conundrum:
‘Our mother died in 2013 leaving the estate to be divided between siblings. My brother and his family lived with our mother and all siblings have allowed them to live there since her death. The time now has come where we feel it is time to sell. Unfortunately, my brother is unable to buy the property as he wouldn’t be able to afford a large mortgage. All siblings have agreed he can stay in the property for the time being having made it clear he has to find another property. As the executor, how can I make this legal without losing our individual share of the estate?’
You’re right to think that as executor, you have the responsibility for sorting this out. On the face of it, it is a simple matter of asking your brother to leave, selling the house and dividing the net proceeds between your siblings. In practice, it is far from simple and often consumes a lot of emotion, time and expense.
As your brother can’t afford to buy the house outright, there could be an opportunity for him to purchase it from the estate over a set period of time.
You could agree on a value of the property and he could pay you monthly instalments, plus interest, until he owns it. You and your other siblings would all receive some extra (taxable) income without having to uproot him.
It is unlikely your brother will make himself and his family voluntarily homeless. His share of the house may not be sufficient to buy another property and his income may not be high enough for him to bridge the gap with a mortgage.
Nor does he have to move without the estate having obtained a court order evicting him. So, if you fail to reach an agreement and your brother refuses to leave, it’s likely the executors will have to take court action.
If some sort of promise was given to your brother by you or your siblings that he can stay in the property indefinitely provided he repairs, insures and maintains it, this could lead to him raising the defence of ‘estoppel’. In layman’s terms, this means preventing you from going back on your word.
That would mean the court would only grant an order for sale consistent with the promises given to him. As executor, you will need to explore what promises, if any, were made.
If your brother has paid anything towards a mortgage or carried out improvements that have increased the value of the house, he would be entitled to an enhanced share of the proceeds of sale.
A case to sue?
As the executor, you might be confronted by your mother’s estate being sued by your brother under the Inheritance (Provisions for Family and dependants) Act 1975.
The basis of the claim would be that your late mother did not make reasonable provision from her estate for him and his family. However, such a claim must be made within six months of the Grant of Probate – after that time, permission of the court is required to bring a claim.
Your brother may have lost the opportunity to make a claim, which could result in his share of your mother’s estate being increased substantially.
His wife and children may also have had a potential claim as dependents. This is something you must take legal advice on.
Whose name is the house in now?
If the house was transferred into all the names of residuary beneficiaries as tenants-in-common sometime after the Grant of Probate, then their interests would be protected as legal owners.
But more likely the title will show the house is still in the estate, or possibly the names of the executors as trustees, and this has some capital gains tax implications.
Your role as executor
All in all, this is a minefield for all parties. But as executor, you have a duty to act impartially.
If a private agreement cannot be reached, it would be wise for each party to get independent legal advice and then see if the matter can be resolved amicably or by mediation.
Litigation would be the last resort and it’s impossible to suggest what the outcome of that might be, other than that all of you may be getting a lot less than you might have otherwise received.
This is an edited extract from a longer Q&A published in This is Money. If you find yourself in a similar situation, you should seek legal advice based on your own unique circumstances.
Have you been in a similar situation with a shared estate? How did you approach it and was it eventually resolved? If you were an executor, did you have any difficulties in acting impartially?